Job Discussion Forums

[Pitarou]

You may remember me predicting a few months ago that all our savings would be wiped out in the coming financial apocalypse (a.k.a. Abenomics). So how are things looking now?

There were three arrows to Abenomics:

1. Push up inflation to 2% through massive "Quantitative Easing"

2. Free up the most overregulated sectors of the economy

3. Throw cash out of helicopters. Um. I mean, public works.

Well, I guess the Olympics & Fukushima takes care of 3. And I am not impressed.

No real signs of 2, yet. I don't think the TPP will make much difference, because the Japanese political class is too stuck up its own nationalistic ass to to be capable of negotiating a wide-ranging, multilateral economic treaty. Heck, they can't even close a trade deal with America, who're supposed to be their closest allies.

But what about 1? I'm looking at the latest inflation charts now:

www.inflation.eu/inflation-rates/japan/historic-inflation/cpi-inflation-japan.aspx

and it looks like Abenomics hasn't moved the needle! All those trillions of yen printed, and inflation is still hovering around 0%.

What to make of it? In fact, I think it's good news. If you're a quadrillion yen in debt, the ability to summon money out of thin air without serious side-effects can come in pretty handy. It also means that the vicious cycle that the doom-mongers (including me) were predicting hasn't happened. (The cycle was: Bank of Japan prints money -> inflation -> government bond prices fall -> banks wobble because all their capital is bonds -> Bank of Japan buys bonds to prop up prices -> Bank of Japan prints even more money -> ....)

So not a total disaster, but I'm still not optimistic. The combination of a rapidly ageing population, xenophobia, and all-but-unreformable businesses and institutions remains a recipe for disaster. As Hemingway put it:

[Solar Strength]

The Corbett Report and The Anarchist both report currency collapses that are likely to happen in the future. So, we can protect ourselves by buying gold?

I think what you mentioned is a good idea, and that's to keep a good chunk of one's savings outside of Japan in dollars or pounds, euros, whever you're from.

[rxk22]

Was wondering the effects. Are prices or wages going up at all?

Well 0% beats -1%. So at least there is that.

If you live in Japan and don't have a separate retirement account, shame on you. You should def have something in a fund otherwise you'll never retire. Same as in the USA. You need to plan for your retirement.

Also something else that is worrisome. JAL and Ana through japan under the bus. Without purchases from Boeing Japan may face terriffs from the USA. As well as lose Boeing contracts that are worth $4b a year

[Pitarou]

[Pitarou]

[rxk22]

[rxk22]

http://seekingalpha.com/news/1700893-reuters-boeing-to-ask-japanese-firms-to-build-20-percent-of-777x-planes


Boeing is only giving 20% of the 777X to Japanese companies. Much less than the 35% that the Japanese get for the 787. Also a bit less than the 21% for the 777. Just saying, not really revenge for JAL, but not too bad either. As the airline industry is going to do some serious growing for at least 20 years.

[Maitoshi]

Kinda thinking that maybe the States and Japan will continue to run the printing presses. Sort of a race, if you will. The currency pair could be trading at close to parity for some time to come.

[Pitarou]

[rxk22]

Indeed, the US is starting to taper, which will increase the strength of the dollar.
I have talked to several Japanese about the yen, and many think it will get stronger. I frankly don't see how, as QE will ensure that it stays cheap.

[Maitoshi]

So the US has begun to do more than just talk about the taper? It is politically expedient to talk about it, but getting up the courage to actually do anything is a whole other story.

Yes, Japan is printing faster in relationship to the size of its economy, but inflation also remains lower and the majority of its debt is held by its own citizens. If they ever get inflation kick started (which is an explicit goal) they aren't going to face a mountain of international pressure to cut it out (at least not from any nation that can seriously complain without falling into that whole pot and kettle situation). The pressure will come from within as Grandpa sees his savings dwindle in relative value, but by that time, much of the stated goal will have been accomplished. Increasing the consumption tax also seems to have had an impact on the nation's attempt to jumpstart inflation.

When has the US ever had the courage to be so explicit about its goals?

[rxk22]

[rxk22]

http://finance.yahoo.com/news/abe-aim-gpif-expanded-oversight-panel-sources-013851159--sector.html

Japan's pension fund is 1.26 or so TRILLION $. Looks like they are, wisely going to start buying foreign securities and bonds. As Japanese bonds and their .6% yields won't even keep up with inflation.

Too bad Japan makes it so hard to Japanese citizens to own foreign stocks, as the savings here is worthless. Why have $100k or so in the bank? That serves no purpose for the average family. You end up losing to inflation. I own a mutual fund(don't like them as much as ETFs) that has multiple international securities. I wonder if any Japanese mutual offers that, or even ETFs?

I know before the 80's that in Japan you could get a decent yield on you savings account, but that died 20+ years ago. Heck, in the US I had a bank account yielding 3% in the 90s. That is long dead too. The world is now, invest your money or lose to inflation.

Just how it is, and most Japanese really don't have even the slightest clue in how to invest. Sad, as it is eroding the wealth of the average Japanese household

[mitsui]

I get 15% interest but the money had to be converted into dollars.
For 18% interest it would have to be converted into Australian dollars.
I forgot the bank. It is in Tokyo. My wife took care of it,

The minimum to put in the bank is 1 million yen.

The yearly dividend pays like a decent bonus.
I also think there are not rules where the money has to be kept in the account for years.

[rxk22]