Sunday, February 8, 2009

Lucas sent me this link the other day asking whether it was on point or an exaggeration:
http://www.nakedcapitalism.com/2009/02/japan-on-edge-of-abyss.html


I live outside a prefectural capital, Okayama City, which is about 600,000 people. I have been here working in the ornamental fish farming/export business since 2005. I am neither an economist nor used car salesman, just an observer in Japanland. From what I see directly around me, not so much has changed the last year or so, although I think a "salaryman" in Tokyo or Osaka might see things different. Certainly the news paints a grim picture. All the car companies are producing at 1/2 or 1/3 of normal pace, those people are working less days a week, salaries coming down. The electronics industries looks the same. In the export world, the yen is a problem. The Europeans and English especially have not been coming to buy fish in usual numbers. In other years people would come and not buy because of price or availability or whatever, but this year people are canceling trips because it just does not make sense for them to come all the way to Japan and try to buy fish priced in "expensive" yen.

Japanese unemployment is interesting. There are a lot of 60 year old people doing part-timer kinds of jobs in Japan. Why? To pay bills? To pay bubble-era debts? A lot of young people in Japan work part-time jobs(with full time hours) because in doing so they dont have to pay into a social security kind of thing, so they can keep all they earn...but being part-time also means no bonuses. The person hurt most by unemployment in Japan is the 40-something year old Salarymnan who might have his retired parents living with him, a wife that doesnt work or only works part time, and teenage kids. These 3 generational households that are common in Japan, can get bad. I didnt know many/any 3 generational household people when I was in the States. Do you?

I was talking to a Tokyo-living, IT business-owning, American friend of mine the other day about Japan's economy. He says a business in Japan gets taxed nearly 50% on its net profits. Ideally, this keeps businesses from having money sitting around doing nothing as they'd spend the money to upgrade the business or pay their people or whatever. My friend says that as smaller businesses are slowing and/or exporters having problems because of the yen, these businesses have no cash cushion to get them through the hard times. That was something I had not known about before, but explains how Japanese bankruptcies and unemployment can get worse in the coming months. My friend also said in Japan it is easier to fire someone than to lower their salary.

The comments about Japanese having such high savings rate is something I wonder about. That might be the older generation. As a whole, I dont think Japanese people are as indebted as in the US, but I am skeptical about how much saving is going on with average people in the 20-40 age group. In all, I dont see a big change in Japan yet(except the yen problems I see firsthand in the koi business) but the news and numbers suggest things are looking bad throughout the country. In the 3.5 years I've been here there have been 4 Prime Ministers, so something must be going on somewhere....or nothing has been going on so long that a change from that is in the making.

I've got my eye on the $XJY and the yen/dollar in the short-midterm.