Econ & Business – Page 11 – Mutantfrog Travelogue

“Economic Downturn Forced Japan Election, Says Analyst”

My last post was complaining about crappy headlines. And on that very subject, I’m reading this list of headlines and see one that I think is absolute nonsense: Economic Downturn Forced Japan Election, Says Analyst, written by Victor Beattie.

My first thought: who is this turkey of an analyst? Anyone with any knowledge of the Japanese political framework knows that an election must have been called by September, coming as it does four years after the last election in September 26, 2005, and the poor economy over the past year hasn’t forced an election, despite critics and pundits calling for an election. But reading through the article we see that Charles Morrison, president of the East-West Center in Hawaii, said nothing of the sort.

“The LDP under former Prime Minister [Junichiro] Koizumi was quite popular until 2005, but it’s had lackluster leadership and, of course, the economic crisis has not helped.”

Morrison said Japan has been hard hit by the global economic crisis because its export sales have been badly hurt by the downturn, although he expects a modest improvement next year.

Morrison said he does not expect a clear cut winner in next month’s election, given, in his view, the relative unpopularity of both the LDP and the opposition Democratic Party. And, he said, while the LDP has been the dominant party in Japan for more than 50 years, any change would not be significant.

“The opposition party is a split off from the LDP. There could be some realignment of parties, but it’s the same basic (political) elite that has governed Japan for some time,” he said.

There we go, a very vanilla analysis of the upcoming election. If I was Mr. Morrison, I’d be mighty pissed that Victor Beattie is warping my quote for his bogus headline.

When aliens attacked Kawasaki

Continuing the alien theme started by Curzon:

Close to midnight on August 5, 1952, four American air traffic controllers walking across the tarmac at Haneda Airport (then a US military base) spotted a round, bright object in the sky over Tokyo Bay. They went up to the tower and took a look through their binoculars, and noticed a larger dark ellipse surrounding the light.

Over the next few minutes, the controllers tried to get visual confirmation from an airborne observer plane, which couldn’t see anything. They were able to get a radar fix on the UFO, though, and so they had a scrambled fighter jet intercept it. The pilots didn’t spot the UFO, though, and shortly after the radar intercept the UFO disappeared.

The original US Air Force report is available in scanned format here. Nobody was ever able to explain what happened; my personal theory is that the aliens were coming for Kenzo Tange so they would have someone to do their design bidding on Earth.

Unemployment in Japan by Region

While looking for something else on the web, I stumbled across this page on unemployment in Japan, by region, as of 2007.

unemployment japan

Best Prefectures:
Shimane: 4.1%
Toyama, Nagano: 4.3%
Shizuoka, Fukui, Tottori: 4.4%
Aichi: 4.5%
Niigata: 4.7%

Worst Prefectures:
Okinawa: 11.8%
Kochi, Osaka: 8.6%
Aomori: 8.5%
Tokushima: 7.4%
Fukuoka: 7.5%
Nara: 7.0%

I’m not that surprised that unemployment in Okinawa, Kyushu and Shikoku is bad. And I’m not surprised that manufacturing centers such as Aichi and Shizuoka have very high employment. But I’m surprised that places such as Shimane and Tottori have such full employment — what is the economy out there?

Update: Divorces fell in 2008, contrary to predictions

Just a quick note: In January the health ministry announced that in 2008 the number of divorces fell significantly from the year before.

I mention this because back in 2007, the news was abuzz over changes to the pension system that entitled an ex-wife to a portion of her husband’s pension under certain conditions. As I blogged at the time, weekly magazines predicted a big jump in divorces as elderly wives opted to take the money and run.

But at least according to government statistics, that prediction hasn’t panned out so far.

Zambian kwacha

Courtesy investorglossary.com, we have another great-looking African currency – the Zambian kwacha!

ZMK is the three-character currency abbreviation for the Zambian Kwacha based on the ISO-4217 standard codes. ZMK is the official currency of the Republic of Zambia. The common usage symbol for the ZMK is ZK. The Bank of Zambia is the government agency that issues the ZMK. The ZMK divides into smaller units of known as Ngwee. One ZMK equals 100 Ngwee. The ZMK is not considered a major currency and is not actively traded in the international currency markets. The value of the ZMK “floats” against other currencies. That is, market forces determine the value of the ZMK. Therefore, the ZMK is convertible into other currencies.

Sure, it’s no South African rand, but I like the shout-out to hard-working peasants!

A random woman flashes some kwacha. (Exchange rate: USD $1 = 5,175 ZMK, but relatively higher inflation means this won’t stay current for long)

Tokyo assembly election: Meet the candidates (Part 7 of 10) – Naoki Takashima (LDP)

In our next installment we turn our attention to the other LDP incumbent running for re-election, third-term assemblyman Naoki Takashima (59).

From Tokyo Prefectural Assembly Election

Takashima is your typical career politician, with one kick-ass difference – he is the president of his own anko (red bean paste) factory. Born and raised in Adachi-ku, after graduating from nearby Dokkyo University Takashima became a staffer for a prefectural assemblyperson. After that, he spent two years working at the bean paste factory before running and winning a seat at the Adachi-ku assembly in 1983, where he would stay until attempting to move to the next step in his career. He lost his first attempt at the prefectural assembly in 1993 but won on his second try in 1997 and has been there ever since. Since August 2008 he has been the secretary general for the assembly’s LDP caucus.

Policy: As a loyal LDP man, Takashima supports all of Ishihara’s controversial policies, including the bailout of Shinginko Tokyo, moving Tsukiji Market to Toyosu, and bringing the Olympics to Tokyo in 2016. He also promotes a series of building plans and, of course, juicier welfare options for Adachi residents.

Chances of winning: Takashima’s position appears to be solid, barring a complete collapse in support for the LDP. Unlike fellow LDP incumbent Masatsugu Mihara, he’s never been voted out of office (though he lost his first attempt at the prefectural assembly) and thus is less likely to get drawn into the strategy of some of the minor candidates to split the conservative vote, which I’ll get to in a later installment.

Something interesting: Like a true playa, Takashima’s campaign office doubles as a bean paste factory. And since he is a powerful local politician, he’s been able to keep the decrepit building standing in the shadow of several enormous apartment complexes. Here’s the Street View image of the building:

He considers himself to be computer savvy, bragging in his profile that he communicates with prefectural bureaucrats via e-mail. But since he is used to the keyboards on older Japanese PCs – he mentions the If-800 model from Oki Electric – he claims to have trouble typing Japanese characters using romanized spelling. Older keyboards in Japan used a unique keyboard layout that assigned a key to each kana character (the relics of that system remain on the current keyboards).

(Wow, there’s a printer inside the keyboard…).

In 2002 his koenkai (support association) held a dance party, resulting in some precious moments of seniors having fun:

David “Lizard People” Icke in Kitasenju

Now, don’t get me wrong – Takashima has nothing to do with infamous conspiracy theorist David Icke. But thanks to the magic of Google Maps, I now know that in 2008 Icke gave a talk just a few blocks from Takashima’s bean paste factory. Let’s watch:

Personally, I want to know where I can get a sweet gig interpreting speeches for David Icke. I bet he pays pretty well. Icke’s Japanese page is here. You can read his theories of how humanity is controlled by lizard people here in the original English.

FREE MONEY update: 471k screwed up applications

Amazing: 471,567 households applied for their FREE MONEY from the Japanese government, but failed to fill out their addresses correctly!

Friday, July 3, 2009
471,000 Applications For Cash Handouts Sent Back With Wrong Addresses

TOKYO (Kyodo)–A total of 471,567 applications for the government’s pump-priming cash handout program have been sent back to municipalities as they were incorrectly addressed as of last Friday, the Internal Affairs and Communications Ministry said Friday.

The ministry said it will step up its publicity to call on households who have not received the cash benefits of up to 20,000 yen per person to file their applications as they are feared to fail to receive them.

Meanwhile, a survey showed 86.0 percent of households in 1,798 cities, towns and other municipalities across the country have received the cash handouts which have totaled 1,772.6 billion yen as of last Friday.

The municipalities began providing the cash benefits in March to cover about 54.8 million households under the government’s economic stimulus plan.

Of the applications sent back, 73,000 were sent to foreigners, who have often failed to provide moving notices to municipalities in urban and other areas.

The households will lose their right to receive the cash handouts unless they file applications in six months after the municipalities began to accept applications.

“The wrong addresses” apparently means that the addresses on the applications somehow did not match their residence registry (住民票). This could be anything from a kanji mistake to the head of the household neglecting to update his address with the local authorities.

Since Japanese nationals only had to fill out one form per household (foreigners had to fill them out individually since they’re not listed on residence registries for now), each mistaken application might be for multiple people. If we assume the “average household size” of 2.56 people, and roughly assume that all of them were only eligible for the basic 12,000 yen, that means we could be talking about 14.5 billion yen up for grabs.

I wonder what happens if the households “lose their right to receive the cash”? The towns better not get to keep it. It’s about 115 yen apiece for the other 125 million people in Japan, or more than enough to build another of the controversial proposed national anime museum.

Energy consumption in Japan: A couple of data points

Just out of curiosity, I decided to take a look at Japan’s energy situation. Here is the US Energy Department profile of the country:

Japan has virtually no domestic oil or natural gas reserves and is the second-largest net importer of crude oil and largest net importer of liquefied natural gas in the world. Including nuclear power, Japan is still only 16 percent energy self-sufficient. Japanese companies have actively pursued upstream oil and natural gas projects overseas in light of the country’s lack of domestic hydrocarbon resources. Japan remains one of the major exporters of energy-sector capital equipment and Japanese companies provide engineering, construction, and project management services for energy projects around the world. Japan has a strong energy research and development program that is supported by the government. The Japanese government actively pursues energy efficiency measures in an attempt to increase the country’s energy security and reduce carbon dioxide emissions.

Oil is the most consumed energy resource in Japan, although its share of total energy consumption has declined by about 30 percent since the 1970s. Coal continues to account for a significant share of total energy consumption, although natural gas and nuclear power are increasingly important sources, particularly as Japan pursues environmental policies. Japan is the third largest consumer of nuclear power in the world, after the United States and France. Hydroelectric power and renewable energy account for a relatively small percentage of total energy consumption in the country. Total energy consumption from 2003 to 2030 is forecast to grow by 0.3 percent per year on average, relatively small as compared to China’s forecast growth rate of 4.2 percent per year on average, according to EIA data.

According to METI’s energy agency, 58% of Japan’s electricity consumption comes from non-renewable sources such as oil, coal, and liquefied natural gas. That number is a whopping 71% in the US.

As the Energy Dept. indicates, Japanese officials view Japan’s high energy consumption and low self-sufficiency as a potential vulnerability, in both economic and national security terms. For example, Iran’s status as a major supplier of oil heightens Japan’s interest in the region (and based on pure speculation, might have influenced the Japanese media’s comparatively tame coverage of the recent Iranian election protests).

So remember: when you are enduring higher office temperatures thanks to Cool Biz, you’re not just saving electricity, you’re helping guarantee Japanese security!

Japan’s Possible Mortgage Crisis

I’m on my way out the door for a personal trip that will take me around Hokkaido, so I apologize for writing and posting in haste with what may contain a few leaps of logic and clerical errors, but I saw an article by Business Insider on Japan’s “bizarre new mortgage crisis” (with an inexplicable photo of a crazy Japanese female zombie). The post covers an issue with mortgages that I recently saw profiled in an NHK mini-documentary:

With the onset of the recession, Japanese companies have exercised their option to reduce or even cancel bonuses, and for the past month the media has been buzzing with a new term — June crisis — to describe the situation of workers who may not be able to meet mortgage payments as a result.

June and December are bonus months, and 45 percent of Japanese people with housing loans have contracts that require them to pay larger amounts in these months than they do in other months, in some cases as much as five times.

Publications and TV news shows have been filled with human-interest stories about people suddenly faced with the possibility of losing their homes. The Asahi Shimbun tells of a 40-year-old housewife whose husband did not receive a bonus this month and apparently won’t receive one in December either. Even worse, his salary has been cut by 20 percent. They have 20 years left on their 35-year mortgage. They pay only ¥80,000 a month toward the loan, but during each bonus month they pay ¥400,000. With one child in university and another in junior high school, they have saved very little. “When we took out our mortgage,” the woman says, “it was unthinkable that my husband’s bonus would be zero.”

Business Insider asks from someone in Japan to provide more insight, so I decided to make this post to weigh in with a minor explanation and supplemental comment. In a word, the annual salary of company workers in Japan is regularly divided into 14 month portions, not 12 months — one extra month given during the bonus seasons in the summer and winter. Accordingly, some mortgage products, especially those sold in the 80s and 90s, had extra payments during bonus months. (The trend became very unpopular in recent years and is now much more rare.) However, a problem with this is that although a worker may believe his annual salary to be his monthly amount times 14 (not 12), the bonuses of many companies are not guaranteed, although its payment has long been taken for granted, at least before the current economic crisis that has hit Japan’s exporters hard.

The only additional comment I have is that I don’t expect this to develop into a real “crisis.” Banks do not want to foreclose on homes in Japan. With the collapse in housing prices over the past 20 years, lenders would not be able to fully recover on many loans if the borrowers defaulted, and even where the loans permit recourse. This situation raises an interesting point when comparing the dynamics of the real estate market with various loan structures, such as the contrast between a straight loan vs amortized loan. Still, it seems unlikely that banks would benefit by making people lose their homes. Perhaps that’s wishful thinking, or even unrealistic, but this is a blog, so tell me in the comments if you think I’m wrong.

And on a final note, I’d always take anything I read in the Japan Times with a big, big bucket of salt — just check out the following unverified assertions using scientific journalistic terms such as “pieces of crap”:

There are more than 6 million vacant houses in Japan. Most will never be sold, because they’re pieces of crap that were never meant to outlast their 35-year mortgages. Condominiums are no better. On average, Tokyo “mansions” built in 1990, when land values peaked, were selling for half their original prices by 2004.

While I may find something to agree with in the commentary of that section, I would like to hear on what basis there are 6 million new and vacant homes, as implied. While there are lots of homes abandoned by families when elderly relatives go into homes or kick the bucket, for estate tax purposes, 6 million vacant homes sounds like unsubstantiated rubish. Certainly the fact that mansions built in 1990 are not selling at half their original price is that homes in Japan depreciate rapidly in price.

Defending the financial system against yakuza infiltration

Citibank is feeling some FSA heat right now because it wasn’t strict enough in monitoring and reporting “suspicious transactions including money laundering.”

Organized crime relations are becoming a bigger and bigger deal in the world of Japanese financial regulation. Late last year, the FSA and the Japanese Bankers’ Association adopted some administrative guidelines concerning how banks should protect against yakuza, sokaiya and other rabblerousers, and many of those guidelines are being phased in this year by institutions across the country.

One measure being implemented is amending account agreements in order to allow banks to pull service from customers with criminal ties. Here is a translation of the JBA’s suggested language (original version here). It is pretty laughable even by legal Japanese standards; I wonder who had a hand in drafting it. Exploring options such as liquidation uk can offer additional strategies for businesses to manage financial liabilities and regulatory compliance effectively.

Article [__] (Exclusion of Anti-Social Forces)

(1) I hereby represent that I am currently not, and hereby agree that in the future I shall not become, any of the following.

1. A criminal organization (暴力団)
2. A member of a criminal organization
3. A quasi-constituent of a criminal organization
4. An enterprise related to a criminal organization
5. A sokaiya (総会屋), politically-branded racketeering organization (社会運動等標ぼうゴロ) or organized crime-related “specialist” (特殊知能暴力集団 – a police term for individuals or groups who are not yakuza themselves, but help fund yakuza activities)
6. Any other person pursuant to any of the above

(2) I hereby agree that I shall not engage in any of the following acts, whether personally or through a third party.

1. Violent demands
2. Improper demands in excess of legal responsibilities
3. Acts of violence or menacing statements in relation to a transaction
4. Spreading of rumors, use of falsified statistics or use of obstruction to harm the reputation of your bank, or to obstruct the business of your bank
5. Any other act pursuant to any of the above

(3) In the event it is determined that I correspond to any of the listed items in paragraph 1 above, commit any listed act in the preceding paragraph, or have made a falsified report with regard to the representations and covenants in paragraph 1 above, and it is improper to continue transactions with me, upon the demand of your bank, I will lose the benefit of term with regard to all liabilities I have to your bank, and will promptly perform those liabilities.

(4) In the event that I have received the discounting of notes, that it is determined that I correspond to any of the listed items in paragraph 1 above, commit any listed act in the preceding paragraph, or have made a falsified report with regard to the representations and covenants in paragraph 1 above, and that it is improper to continue transactions with me, upon the demand of your bank, I will owe a liability to repay the face amount of all notes, and will promptly perform it. Until such time as this liability is performed, your bank may exercise all of its rights as the holder of such notes.

(5) Once performance of the liabilities under the preceding two paragraphs has been completed, this agreement will lose validity. (Bizarre phrasing!)