Tag Archives: business

Amateur Hour at TEPCO

2 Sep

Amateur Hour at TEPCO

Well here we are 2 years and 6 months later. The government as well as parts of TEPCO management have changed but the excuses haven’t. Their press conferences are frighteningly puerile with the media hardly reporting on it at all. There is a reason why the Fukushima problem is not being reported to a large degree in the domestic market but it does not change the facts of the ongoing situation here in Japan.

I am not surprised, are you ?

It has been widely reported on the net and from foreign news sources that TEPCO built almost 1,000 tanks to store tons of contaminated water. Yet they did not test the valves or sealant in the tanks. Further these same tanks do not have water pressure gauges either. Then for an added bonus the company said that a total of two workers are responsible for checking the tanks. Huh ?

I have a question.

Is TEPCO serious ? They must be joking right ?

The plan was to build tanks, fill them with radioactive water without testing the sealant, not to install pressure gauges, then to reduce monitoring to a minimum ? Sounds like a winning plan to me.

Who is asking about these issues in the press ? Wait don’t answer that because I am sure the excuses will be worse than the “plan” TEPCO instituted. I get that nobody wants the job; its dirty, its dangerous, its unpopular and perhaps most compellingly its taboo.

Yup thats right folks. Talking about Fukushima is taboo.

If you think about this cultural safety valve it does help put many of the other issues into better focus. War crimes ? Taboo. Historical trouble in the region and the causes of them ? Taboo too. It really does bring up an image of an ostrich with its head in the sand. Problem ? What problem ? I don’t know about any problems.
I recently tried to discuss this issue with a long time expat friend of mine that I have known for over 10 years. He seemed incapable of understanding my point that how others perceive Japan is just as important as what Japan does going forward. It became so frustrating that I gave up trying to make the point. Perhaps I shouldn’t have but if one factors in the taboo, it makes perfect sense.

After realizing this point and spending the mental downtime to better understand it I think I can better appreciate the Japanese. They want to do well, and they try their best to do things right and if they get it wrong nobody talks about it. Its a very effective method for moving forward.

Sadly by brushing everything sordid, distasteful or dirty under the carpet there are bound to be bugs and disturbances that come about as a result. So remember that round these parts its best not to talk about past mistakes.

Is that how you live your life ? Wow talk about ghosts in the closet !

As a teacher I sometimes tell students that the best way to learn is to make mistakes, yet many diligent students here do not want to take the risk of making a mistake. The system here teaches that by venturing no answer or opinion and waiting, the teacher or senior will eventually provide the answers.

I don’t think the Western methodologies of peer based guessing are any better, just different. If I had to explain it I would use the coin analogy. Both sides are effective and one does not serve a more important function than another. I suppose I should post something about teaching on the blog but the political and environmental situation just get stuck in my craw and I want to purge the gestalt.

Meanwhile Shinzo Abe left on a nuclear technology export road show to the Middle east and Africa this week visiting Bahrain, Dijbouti, Kuwait and Qatar. Japan has already signed a nuclear cooperation agreement with UAE.

Business as usual I suppose. That other stuff belongs under the carpet.

July 12

9 Jun

Mark your calendar boys, girls and bots because that is the day when the upper house of the Japanese parliament will have an election. Besides the obvious conclusion that an election has the possibility to change policy, this particular election holds more weight than normal because it is in the upper house that Abe’s policies have faced opposition.

So the question is will the Suzuki, Sato and Watanabe’s go out and continue to support the LDP and their Abenomic policies ? If they do in fact go out and vote up the LDP party line thus paving the way for less resistance to Abe’s choices then look for things to really grind into gear round these parts.

120 yen to the dollar is not outside the realm of possibility.

Nor will a corresponding response from the Koreans be of any surprise. These two nations are essentially fighting over a similar market share and I highly doubt Seoul is going to sit by while Japan continues to devalue its way to an export boom.

My advice is that if you are going to be in the market for anything out of East Asia such as a car, power tools, bearings, robotics etc you wait to see how things shake out. For in waiting you are bound to see a drop in prices, especially if you are holding dollars.

On a side note we here at casa DCY have scheduled a meeting with our local bank to renegotiate our fixed rate mortgage. It should be an interesting event as those who are paying attention can see a distinct rise in rates coming down the line and are rushing to lock in low low rates now.

When and if we are successful I will do my best to update you on the process. Wish us luck cause we are going to need it.

Yen weakens

12 May

For anyone that was paying attention they could clearly see where the Abe government was headed with their new and improved fiscal policy. Then yen has now moved to about 100 to the dollar and will perhaps further weaken. My hunch is that we can easily a 106-108 range by this summer thus further boosting the bottom line.

Business sites across Japan are announcing the return to profit for many of Japans larger corporations. Boosted by the weakened yen, Japan’s value added exports are seeing a nice bump. Will it have any staying power is the question. With elections approaching we will see how well the LDP can continue to grease the wheels of the voters. I have already discussed the antiquated parliamentary district issue as being a key point in how the LDP returned to power. I fully expect this round to be a full menu of “more of the same” with Mr Abe heading into the summer/fall season with higher export numbers boosting his support.

Perhaps the Japanese government will then turn its attention to its rather pathetic attempts of foreign policy. This could become a comedy of errors as pro Japanese officials continue to comment on regional issues without regard to how their comments will be interpreted by their neighbors. There seems to be a never ending parade of stupid comments sent around the world by those who speak about Japan’s strengths in terms of the other party’s weakness. For example, Tokyo’s governor Inose was critical of Istanbul’s bid for the Olympics in an interview with the NY Times and later had to issue a formal apology. This is typical of the foreign policy playbook here.

Its rather interesting because in day to day interactions between the Japanese people the words, manners and tone between them are very carefully chosen. In fact they often bend over backwards to be polite, yet when it comes to handling important international affairs the shoe somehow seems to find its way into the mouth of some well meaning politician. Hope remains but to the experienced its simply a question of time before another comment creates another fiasco.

So we head into the summer of 2013 with elections on the horizon, the nukes due to be turned back on, then yen continuing to weaken and the island controversy still brewing. It is going to get more interesting round here.

Prices are up ?

24 Feb

Since the LDP swept back into power the Abe government has proudly and often stated that their goal is to increase inflation. As to why the public at large would actually vote for such a proposal is somewhat disheartening and is probably more closely related in a desire to change government from the NDP rather than support for the LDP. Among the people I have talked with, many of them have expressed a desire to do something which is in itself holds some merit. For those of you who don’t quite understand the Japanese mindset, the choice between doing nothing versus something here often results in doing nothing. A lot of time, attention and money is spent in meetings discussing things that are never done, so the fact that people are telling me that they WANT change and WANT something to happen is a leading indicator of more “news” to come.

Perhaps had the general voting public better understood what the Abe government wanted they might have opted for the do nothing approach. In an effort to boost exports the yen has dropped quite significantly. Yet trade has not improved published numbers show an across the board dip in exports. Perhaps that is somewhat attributable to China being approximately 20% of Japan’s market while the Abe government talks tough on the disputed islands. Once again a clear foreign policy failure by the Japanese government who has shored up its domestic support with “China is the problem” comments at the expense of its corporate overseas earnings. I suppose we should wait another quarter or two to see how things transpire but I am not hopeful that things will change.

The drop in the yen’s strength dovetails nicely with an increase in the Japanese governments buying of US debt. So perhaps with tacit agreement by the US, Japan has devalued the yen in an effort to boost sales. We will see soon enough if this is a winning formula. I believe it is perhaps short term “winning” tactic but a long term losing strategy. Japan has not addressed its core issues going forward and is simply creating more debt in the public sector. Further with March 15 tax day approaching, many of the government programs will expire. For example if one wants to buy a “light” car and you want to take advantage of some government support, you need to purchase your car prior to March 15. Last time I checked I heard that qualified candidates might get up to about 800 bucks back on a new car. Cash for clunkers anyone ?

Actually my wife and I will be buying a new light car in the next few weeks so I will try and post something about the experience.

With the yen dropping in value, import prices are rising. Bananas, Gasoline, Meat are all already up in price or scheduled to rise. Yay, your average blue collar family now has less money to spend on education, paying off loans etc. Meanwhile the alleged export boost has failed to materialize. I can’t say how long it will take for the voting public to recognize that they have voted against their own best interests but if the pattern holds true I would say by August or Christmas at latest Mr Abe will start feeling the pressure to announce elections.

Now is the time for him to act. I believe he is going to get the BOJ and finance department changes he wants, further weakening the yen. He has been open in his declarations about the LDP plan so far and he knows better than anyone that his support will fall off going forward. He has to move forward with the LDP blueprint and hope that it shows results.

What has me scratching my head is how inflation among the things the general public consumes is going to benefit the Japanese people. Prices are still too high here and that is after 20 years of deflation. I am certainly not wishing the LDP ill will as my adopted country needs to change course but I honestly don’t believe that Abe’s decisions are best for the Japanese people. Maybe I will be proved wrong, but I doubt it.

Forecast is for stormy skies ahead

5 Feb

Sad to say that it appears things are looking worse round these parts.

TEPCO has received an additional 700,000,000,000 in yen for their Fukushima compensation fund putting the total available at 3,240,000,000,000 yen. Yes that’s 3 trillion yen folks. The monies are to be spent on projects and other expenses related to the nuclear meltdown and are already being poached by the criminal elements in society.

Decontamination crews have had their wages cut or withheld by employers out to milk the system. I would rather not get into the ugly details about what “decontamination” means here but simply put persons using a dirty rag to wipe off a roof tile are part of the solution. Further there isn’t a place to keep the dirty soil so it is put in garbage bags and piled up wherever they can find space. I guess its the heftybag solution to nuclear fallout.

I just read that a toxic smog from China is now floating over Japan. Its not surprising that this would occur due to the following facts;

1. China puts a new coal fired power plant online every 3 weeks and will do so for the next 20 years
2. The quality of China’s coal is marginal and has a very dirty burn resulting in a high particulate rate
3. During Winter the winds blow from the West to the East, thus Japan is downwind from China

People are being cautioned about going outside, especially the young and old. its interesting as many schools have just completed their mandatory student marathon class. Perhaps the air was unhealthy then as well ? I don’t know for sure but it wouldn’t surprise me in the least if it was.

Its hardly scientific but a number of people in my neighborhood have all experienced nausea, vomiting and severe headaches over the past week or so. Perhaps there isn’t a correlation but then again…

Our local newspapers here are now reporting that Mount Fuji has increased pressure. The mountain is starting to vent gas along the NE side. Lakes near the base of the mountain also have heightened water levels of about 1 meter. The entire area is a subduction zone with Suruga Bay pushing under Fuji like an escalator. My neighbor mentioned Fuji acts like a clock erupting every 300 years. The last eruption was 1707.

So its good news all around !

The Abe government continues to devalue the yen so as a result prices are starting to climb at the retail level. Perhaps I have mentioned some of this news before but I thought it prudent to post it in case I hadn’t.

Anyway today we are off the wholesale food shop and to kick the tires at a local car dealer. With some luck we will get a credit approval for a rock bottom low rate on a car loan. Lock in a fixed rate and smile all the way to the bank if and when the Yen hits 150.

Yen weakening

15 Jan

I posted some time ago that Abe’s position was mostly about hope. I thought that he was going to pay mostly lip service and it would be business as usual, but it appears I was wrong. I wonder how long the hope will last ?

Well as of right now the Yen has “weakened” to 89 to the dollar. With the Yen moving back towards making exports profitable again it appears the government can buy themselves more time before ultimately falling to the quadrillion yen debt they have built up over the decades. I have read that Zaibatsu want to reach a 106-08 range to pad their profits enough to go back to business as usual. If Abe continues to have his way perhaps we will see the magical 100 yen rate hit perhaps by March ? Its going to be interesting to see how things pan out now that Obama is back in the saddle after a long campaign season. My bet is on dollar rally until washington gets its act together and further devalues…

The market in Tokyo is up too. The Nikkei hit its highest level since April 2010. I think the question everyone is asking is “Are we seeing a new normal or is this just noise in an otherwise very dim market going forward ?” My guess is the later but I suppose the title of this blog would indicate that I am bearish on things.

Inflation, Deflation and precious metals part 1

13 Jan

Usually this blog discusses Japan and issues dealing with the Japanese. This is primarily because I have put in enough time here that I am comfortable making conclusions about the Japanese mindset. I feel fairly confident about the forecasting and issues discussed here about East Asia.

However I wanted to diverge from the familiar topic of how Japan is heading towards the rocks onto a different subject of Precious Metals and investing. As those of us who believe that the world’s political decision makers continue to choose the path of inflation I see a clear path towards saving my hard earned money. This is in two words, precious metals.

A major decision barrier for today’s educated contrarian investor is the inflation v deflation debate. I have toyed with this problem for awhile now and have come to the conclusion that it is in fact possible to have both existing simultaneously. I believe we will see the price of things needed for daily life increase and prices for things unnecessary to drop. So energy and food prices will rise while many manufactured goods such as sneakers, power tools and television sets will drop. Obviously this is a generalized conclusion based upon somewhat limited data but I believe that eventually we will see this dichotomy prevail in world markets.

What does it mean ? I think it means a drop in lifestyle for your average western consumer. I also think it means a rise in the living standards of the emerging world middle class who will want to consume the lower priced shoes, tools, and tv sets.

Assuming that most reading what I am writing are western consumers I am afraid to say that the facts speak for themselves. The USA is approximately 5% of the worlds population, but consumes about 25% of the worlds energy. Does anyone realistically believe this is a situation that can be maintained for any period of length without adjustment ?

As energy and food prices rise your average North American will continually be put into a position of scrimping on consumption in order to maintain the lifestyle choices. Simply put, heat your pool or buy the next semesters textbooks, go out to eat once a week or keep every family members wireless contacts paid. In an earlier time such as the 20th century Americans could choose both. I don’t think this is going to be rule going forward.

What can your average Joe do in order to keep his savings from inflating away ? I am certain that the answer is precious metals. Now within the metals community there are a number of different viewpoints on optimal decisions. For many gold is the one and only solution but frankly I find that mindset to be flawed. Gold has never been the only monetized metal and to ignore other possibilities seems somewhat foolhardy to me. I think that to a certain degree gold only folks are most likely in the elder generation and so have far more resources to fall back on. As of today an ounce of gold will cost you about $1650 dollars which is not something the average 20, 30 or even 40 year old can easily set aside to purchase.

However what I feel is a critical issue is how the precious metals have been “paperized” or “digitized”. Many investors buy an ETF or other digital representation of precious metals. Perhaps 90+% of all traded metals are in fact paper or digital. People invest in precious metals over the computer and receive a monthly statement telling them whether they have made or lost dollars or euros or whatever national currency they use.

This is a dangerous method of saving. If in fact that over 90% of the precious metals market is digital then in fact it is subject to the business of price controls. People normally would use the word “manipulation” but I want to avoid using this term as I believe control is a more accurate way of describing things.

Currently there are 67 trillion dollars in Forex derivatives traded annually, and over 639 trillion dollars in total derivative transactions through the first half of 2012. In comparison the US GDP total is 15 trillion. There is a lot of money slushing around the world and with record low interest rates it is easy for those in positions of wealth to borrow record amounts of cash.
With most precious metals transactions being done via digits and derivatives the market itself is subject to possible price control. I would like to get into details about this but again realize that I should probably call it a post here and hope to follow up on this at some point in the near future.

Thanks for reading

LDP singing the same old tune

22 Dec

LDP singing the same old tune

Tonight on NHK news there was a round table interview of an LDP representative. There were a series of questions about the nation of Japan and the LDP’s plan for the future.

If you wade through the obfuscation the answers were very simple.

The LDP is going to borrow large amounts of new debt to fuel major construction projects across the country. Earlier this week the new Prime Minister Shinzo Abe had a meeting with the Bank of Japan Governor Masaaki Shirakawa. Shirakawa has an M.A in economics from the university of Chicago and is a DPJ approved nominee who was appointed by LDP prime minister Fukuda. At the time the DPJ controlled the upper house of parliament and kept the BOJ position open for 3 weeks which was a major gaffe and the first time since WW2 that Japan hadn’t had a bank governor.

Mr Shirakawa is most likely going to be replaced as soon as the LDP can muster the time and effort to do so. As a result of what will probably be Shirakawa’s pink slip and the BOJ awaiting its marching orders Abe did most of the talking. The BOJ will fall into the LDP line of promoting inflation, deregulation and economic growth. It then delivered another round of stimulus which has become rather SOP in Japan these days. It will also stand ready to open the spigots of further monetary easing early next year.

The LDP is going to begin construction of new nuclear power plants. This was an easy issue to see through as its only a question of time before the government begins to pressure the various prefectures to turn on their idle power plants. This flies in the face of what appears to be public sentiment, however this blogger feels that Japan is really in a difficult position when it comes to energy consumption. The main obstacle for the LDP to overcome is policy wonk insistence that active faults lie beneath nuclear power plants all across the country. So there will be a gradual insistence from the top that “things are fine” or if they are not “we can restructure things so they will be fine”. Thus overcoming DPJ policy that led to almost every plant closing as they phased in their usual maintenance programs.

How will the younger educated urban people feel about this ? It should be very interesting to see how things shake out going forward. I am hoping it gets testy as it is very unlike Japanese to cause others to lose face. After the Fukushima fiasco, lies and criminal mismanagement I doubt the public will approve of the LDP’s decision. Changes will start brewing shortly after the LDP forces through the policy. It is probably the right decision in the long run but as usual the party doesn’t rule by consensus but rather by edict. It will most likely be their undoing.

Further indicators include the appointment of LDP policy chief Akira Amari as minister in charge of the economic revival. Amari is a well known pro nuke guy. Amari will head the Council on Economic and Fiscal policy which the LDP will use to pass further regulation measures. In a country where regulation is paramount I for one am looking forward to how things will turn out. Will Amari be up for the task ? At 63 years old I would say the jury is still out but I wouldn’t bet on him staying too long.

It appears that Mr Aso who is himself a former Prime Minster will be put in charge of the ministry of Finance as well as becoming deputy prime minister. This blog has a rather negative spin on Japanese politics but I do hold hope for Mr Aso. He is quite capable and unlike Abe knows how to lead. Further posts appear to be held for Mr Tanigaki and Ishihara. Ishihara is a firebrand nationalist politician who has a lot of support from the Japanese conservatives because he speaks his mind and supports popular positions on among other things the Senkaku islands that I wrote about earlier in this blog.

Look for Mr Abe to focus on economics first, and then trying to fix the numerous other issues facing this country. He may quite possibly try and reform the constitution which will have a very interesting affect on the regional powers who carefully watch the Japanese. The last time Mr Abe was in office, his term was most known for a series of scandals, outrage and mismanagement leading to his leaving office and eventually the DPJ taking power.

With 40% of seats in parliament being controlled by the urban voting block I believe that Abe can keep the pork machine doling out enough jobs to keep the rural 60% of seat holders economically satisfied. I think that ultimately the major factor will be if something non economic gets in the way of the LDP’s deregulation and constitutional plans for change.

Abenomics is based on Hope and little else

21 Dec

Abenomics is based on Hope and little else

With the election hype now passed the country can get back into the business at hand. With the new LDP government staring at 20 years of deflation, a stagnating economy, already outrageous prices at the consumer level coupled with more financial printing from Tokyo and a vague promise of inflation does make magic happen. In fact it can be argued that it was the LDP who are responsible for causing the eye popping debt levels in Japan. So we are staring at what is essentially “more of the same”.

Promises of short term cash infusions of approx 2-3 years into already hurting rural communities brought the LDP back into power. This is due to the manner in which political power is determined thus putting the highly educated 30-40 year old urban dwellers in the back seat while the older rural residents get the prime spot at the table. Improving schools and hospitals against earthquake and tsunami is the rallying cry now. Yet here in central Japan the downtown elementary school is closed due to a lack of students. The sales pitch is a lot of hot air. Yes hospitals need to be earthquake resistant but I was under the impression that they were built to withstand earthquakes in the first place. Is the government saying they aren’t and thus must be “improved” ? Only another 10 trillion yen this time and all will be right with the world. From where I sit, something stinks.

Free Trade is dead too. A major LDP insider appeared on NHK tv the other night and said as much into the camera. Japan cannot sign an agreement that threatens to disturb its inefficient and antiquated distribution system nor threaten its pricing policies which keeps the domestic agriculture in business.

The yen will be weakened, yet this has been part of the overall policy of the government for years without success. Are we to believe that because Abe makes a speech and a campaign promise that it is going to happen ? I guess I am from Missouri on this position. Show me Mr Abe, where is the beef ? Yes the yen has moved into the 84-85 range in exchange to the dollar but my understanding is that the goal is about 106-08. Yet Japan must import all its energy and with a weakened yen how will they manage their import energy costs ?

The answer I see will be that the LDP will announce that the nuclear reactors will be turned back on. This will accomplish a few things, reducing costs, providing Japanese energy jobs and offering additional atomic pork to rural communities to provide needed energy to the mega cities.

The clock is ticking on the new PM and his version of the same old medicine just doesn’t add up as I see it. Perhaps having former PM Mr Aso in charge of finance will help to mitigate the oncoming financial disaster we all see coming. Lets hope so, the LDP is going to need all the help they can get. 20 years of financial hell doesn’t go away because the new PM says so.