Posted on 01/27/2009 5:18:11 AM PST by TigerLikesRooster
Japan Caught in the Pop of Its Manufacturing, Export Bubble
By YUKA HAYASHI
TOKYO -- Japan has largely escaped the housing bubble and huge credit losses that are weighing on the U.S. and Europe. Then why is Japan's economy shrinking faster?
Economists and corporate executives are realizing that the nation suffers from the bursting of another type of bubble -- one in manufacturing. Between 2002 and 2007, Japan's manufacturing sector boomed, driven by soaring demand for Japanese automobiles and electronic gadgets by consumers globally, including Americans feeling flush amid rising home prices. Fueling the gains was a weak yen that kept Japanese products competitive and propelled yen-based revenue and earnings for companies such as Toyota Motor and Sony to lofty highs.
Many in Japan were relieved to see their economy growing at a healthy pace again thanks to strong exports, after a slump for more than a decade. But many didn't realize just how vulnerable the economy was becoming to consumers abroad, despite decades of hectoring from the U.S. and Europe that Japan needed to rely less on exports and more on domestic demand.
The foreign advice was hard to implement. That's because workers' pay was kept low amid competition from low-cost nations like China, making it tougher for them to spend.
During the six years starting in 2002, Japan's annual exports jumped by 74%. Corporate capital spending, led by exporters, rose 31%, according to data compiled by Ryutaro Kono, a BNP Paribas economist in Tokyo. In contrast, annual domestic household spending grew a mere 6.6% during that period, as Japan's effort to diversify its economy away from exports stalled in the absence of bold steps by the government, laden with a huge deficit and political gridlock.
(Excerpt) Read more at online.wsj.com ...
Still, E. Asis would be in an economic big chill. Foreign demand for their goods won't be recovering for quite some time.
Ping!
Ping!
Unsold cars are stacking up in every port around the world.
I see the US economic recovery to parallel Japan’s with respect to the number of years it will take to see an upswing. Demand for US exports, other than food and soldiers has been on the decline since 1st qtr 2007.
but by and large, because of the national characteristic traits of 我慢, and 和 (patience/endurance of great difficulty w/out complaining, together with harmony) people are pretty much keeping it together; i.e., to my knowledge nobody has yet dressed up in a Santa suit and wiped out a whole freaking family then torched the place, nor is shoplifting up 80% nor anti-depressants' sales skyrocketing. but i would say with more layoffs we would see more train and subway jumpers.
What a shame...all those unsold Toyota’s are breaking my heart. Toyota has sold cheap in the US-often below cost in order to drive the Big three out of business. This is the same weapon they used against electronics successfully. They could always make up lost revenue at home since they have trade barriers in place to keep foreign autos-including American-out.
I see no shortage of European cars here.
What gives?
European cars are not the target of Japan at the moment...also, we do not have trade barriers towards Japanese cars...no president of either party has ever made Japan play fair (maybe Reagan who forced them to have plants in the US helped some) or Korea for that matter. Our markets are wide open, other countries impose all types of tricky trade barriers...they don’t like this weld or maybe they have trumped up fake safety inspections...the list is only as long as their imagination.This is why those who rely on us for taking their products are in worse shape then we are. We build in China and Europe because we can’t get our cars in any other way...the same is true of Mexico which is now very unstable-possibly on the verge of collapse.
The Japanese had a housing bubble and a serious employment problem in the 80's and 90's. They just kept paying off their housing loans from savings, and they revamped their life-time employment policies to make them more flexible and cheaper. About the only thing the US exports to Japan are things the Japanese can't make themselves - a few kinds of raw materials, some basic foodstuffs and airplanes. Simple, cheap goods, such as shovels and furniture are imported from low-labor cost countries, and they make higher-end stuff, such as machine tools and medical chemicals and equipment at competitive prices when transport, translation, and servicing costs are considered. The US has no savings, but high labor costs and corporate taxes, and imports raw materials, low-cost goods and high-tech goods.
Why just this morning here in Japan--to put to a little test earlier our discussion on FR from yesterday--I just asked a Japanese friend if he generally speaking would buy a US-made car these days. He said "you kidding? I wouldn't buy such a piece a crap." (なんだ、そんな 糞のようなものを買うなんってどういういみ？）
And this is a well travelled person, fluent in English and has been abroad a long time. He would not buy one when living in the USA, either. He was not some government bureaucrat obfuscating and raising a trade barrier. He was a consumer. And he was voting with his feet.
What am I supposed to do as an American here. Force him at gunpoint to buy crap in order to be "fair"?! What a bunch of crybabies who dont know basic economics and free consumer behavior.
Many American cars have better reliability records than their Japanese competitors, especially the smaller Japanese car companies, but the whole service culture negates that attribute.
That said, I always bought Japanese cars when I lived there, and I got Brazilian beef much cheaper than any other. Pretty much everything I bought, with the exception of furniture, specialty foods, and hand tools, was either made in Japan or made overseas by Japanese companies.
I'm pretty sure the same kind of thing can be said by those living in Europe, Korea or China.
The U.S isn't the U.S of the 50's or 60's, and many Americans don't see that. They don't understand that technology is fungible, and that you can teach a Malay peasant how to assemble a high-end computer, or that a Korean company can figure out how to make plasma TV's AND how to make them better and cheaper.
This is what really scares me about Pres. Obama. He has no idea about how to create the wealth that his spending requires. His spending is not aimed at increasing competitive production in the U.S., but more at spending dollars to reward supporters - dollars that he's going to have to borrow from the Japanese and Chinese. I'm starting to wish I was still being paid in yen.
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