8,849: Has the world turned its back on Nikkei 225?

[c1ue]

Re: 8,849: Has the world turned its back on Nikkei 225?

I am sure the yen appreciation is a large component of the deflation, but I wanted to mention that there are many things happening in addition to endaka (high yen) that are having huge effects on living standards in Japan.

Thank you for the anecdote - more data is always good.

I would still repeat, however, that the Japanese societal/economic model is predicated on a trade surplus which in turn was significantly buoyed by a weak yen.

Should this trade surplus go away, the Japanese consumer would then be fully exposed to the vagaries of the yen vs. commodity balance - something which hasn't really been true for decades.

And one of the ways this can happen is if the jobs offshoring gets to the US equivalent stage. While certainly there are industries like tech where this has largely happened (Remember when there were more than a dozen Japanese semiconductor companies as opposed to the present 3 or 4?), I categorically disagree that this is true overall.

The supplier in question in my example uses a small factory in the boonies of Kyoto; this factory has no brand but does have some interesting technology - yet all this factory does is create OEM products such as for my supplier.

Another (former) supplier specialized in thin film breath mints and candies.

The former is going to see at least some of its business hurt due to the yen issue; the latter company already went bankrupt but for now most of the employees found work at a similar firm nearby in Osaka.

Over time, however, it seems likely the entire confectionary industry in Japan is going to succumb to pricing competition as well as foreign exchange pressures.

The shame of it is that there are very many exemplary qualities of Japanese goods - besides innovation and technology, in general the Japanese suppliers I have worked with have a far higher standard of quality than the US, Russian, Chinese, and Korean suppliers.

Why Japan - or at least a few of its specific industries like Sake - don't spend the money to built a brand like French/California wine, Scottish whisky, or the emerging Korean LCD/LED franchise is beyond me.

[jpatter666]

Re: 8,849: Has the world turned its back on Nikkei 225?

The DOE historical electricity data shows a lot of variability, but a clear upward trend in any of the 10 year, 20 year, or longer contexts for pretty much every state.

No doubt, my point was that with the higher-efficiency appliances/bulbs my monthly bills have not changed much. Was about $100/month ten years ago -- still is about $100/month (which floored me last month since it was one of the hottest Julys on record in DC).

We like our new A/C unit!

[mooncliff]

Re: 8,849: Has the world turned its back on Nikkei 225?

Originally Posted by mooncliff
I am sure the yen appreciation is a large component of the deflation, but I wanted to mention that there are many things happening in addition to endaka (high yen) that are having huge effects on living standards in Japan.

Thank you for the anecdote - more data is always good.

I would still repeat, however, that the Japanese societal/economic model is predicated on a trade surplus which in turn was significantly buoyed by a weak yen.
Mooncliff: Yes, totally.

Should this trade surplus go away, the Japanese consumer would then be fully exposed to the vagaries of the yen vs. commodity balance - something which hasn't really been true for decades.
Mooncliff: Yes, this is why the US government is anticipating Japan oil use to decline by 20% within 10 years. The Japanese have been in a peak oil panic for a decade now. The research is starting to pay off.
The single most important thing they can do is improve the earthquake resistance of buildings so that when the overdue big one does come, there will be much less damage.
There was a set of public housing buildings near my station that REALLY needed to be replaced, and there are now very nice apartments there, but 10 times as many, in much nicer buildings, built to a much higher earthquake standard. Because construction technology has improved so much over the last 20 years here, you can tear down an old building and put one up with 10 times the floor space that is much more quake resistant. After the horrible damage in Kobe in 1995 (Although that was kinda a special case with the mountains reflecting the quake waves back so there was interference in unfortunate places with accelerations of minus 2 g, I think. I saw entire 5 story buildings that had been flipped in the air and landed in the middle of an intersection. Just inconceivable.) the engineers immediately started putting full metal jackets around all the columns. Hopefully, the columns will therefore not fail.

And one of the ways this can happen is if the jobs offshoring gets to the US equivalent stage. While certainly there are industries like tech where this has largely happened (Remember when there were more than a dozen Japanese semiconductor companies as opposed to the present 3 or 4?), I categorically disagree that this is true overall.
Mooncliff: There are Chinese tourists everywhere in Japan now, I would say 10 times more than a few years ago, and while the Japanese are afraid of losing jobs, they are terrified that the Chinese will just buy everything up. Hmm, why does that sound familiar?

The supplier in question in my example uses a small factory in the boonies of Kyoto; this factory has no brand but does have some interesting technology - yet all this factory does is create OEM products such as for my supplier.

Another (former) supplier specialized in thin film breath mints and candies.

The former is going to see at least some of its business hurt due to the yen issue; the latter company already went bankrupt but for now most of the employees found work at a similar firm nearby in Osaka.

Over time, however, it seems likely the entire confectionary industry in Japan is going to succumb to pricing competition as well as foreign exchange pressures.
Mooncliff: Yes, I agree.

The shame of it is that there are very many exemplary qualities of Japanese goods - besides innovation and technology, in general the Japanese suppliers I have worked with have a far higher standard of quality than the US, Russian, Chinese, and Korean suppliers.

Why Japan - or at least a few of its specific industries like Sake - don't spend the money to built a brand like French/California wine, Scottish whisky, or the emerging Korean LCD/LED franchise is beyond me.

Mooncliff: I think one of the problems is that Japanese food is a VERY acquired taste.
I hear from friends in New York that there is a big sake boom, but sake only goes well with Japanese food, I think.

Sony is so hurting. They should have progressed from the walkman to the ipod, but I guess they did not understand the computerization that was coming. They are getting creamed in the TV showrooms by Sharp Aquos. I have seen, after discounts, 40 inch Sony Bravias, new models, going for $700 in Akihabara. By the way, if you are in the market for a big flat screen, take a look at the Aquos. The Quatron 4-color picture is unbelievable.

I'm not sure why they are losing out. The management is of course not internet savvy, and there is the huge language barrier that has only recently been partly mitigated by Google search and translation. Even those with graduate level technical English translating skills cannot read something like iTulip at all. Every businessman I said to in 2007 that we were going to have an oil spike, a housing bubble crash, a dollar drop of more than half, and a depression laughed at me. Now when I tell them something, at least they go poking around the net.
There is a very interesting piece called "I, pencil".
http://en.wikisource.org/wiki/I,_Pencil
The Japanese have only about 100 million speakers with whom they can draw upon and interact with easily.
English speakers have more than a billion.
This is one reason I think that while the economy will be bad in the US and Japan for the next decade, maybe about 2020, if we are diligent, we will get a huge boom because of technical progress once everyone can communicate with everyone else via good translation software. Then, it will be billions of people trying to solve problems.
I think we will get to Star Trek world, well, at least some of us, where food, clothing, shelter, medical care, and education are nearly free, and life expectancy is over 100 in very good health.
I see this kind of speeding up in all kinds of biochemical work where problems that used to take 10 years now are solved in a week. And we are about to unleash autonomous computing onto these technical problems.
The great danger is that some idiot somewhere will make a bioweapon.

[mooncliff]

Re: 8,849: Has the world turned its back on Nikkei 225?

No doubt, my point was that with the higher-efficiency appliances/bulbs my monthly bills have not changed much. Was about $100/month ten years ago -- still is about $100/month (which floored me last month since it was one of the hottest Julys on record in DC).

We like our new A/C unit!

Most energy efficient air conditioner/heater in Japan now is by Mitsubishi and is about $1,500 and runs at about 2 cents per hour at the US average rate of 10 cents per kwh. That would mean a 3-month cooling season of about $50, and a 3-month heating season of about $50. Heat pumps don't work efficiently at extreme temperatures, but if the temperature is not too far below freezing, it can take less energy to move heat than it does to produce heat. Mitsubishi heat pump water heaters are about $3,000 and produce enough hot water for a family of four for under $20 per month at 10 cents a kwh. This could be useful in the Pacific Northwest where it is often cloudy and the hydroelectricity is cheap.

[ThePythonicCow]

Re: 8,849: Has the world turned its back on Nikkei 225?

There is a very interesting piece called "I, pencil".
http://en.wikisource.org/wiki/I,_Pencil

There may be a good explanation for how such elaborate know-how has come to be embedded in our civilization.

This "I, pencil" piece is describing institutional memory, which took a major step with the formation in 1602 of the Dutch East India Company, the first corporation financed by selling stock. With this "eternal" institution, outlasting the lives of any founders, specialist knowledge (such as goes into making a pencil) had a home for the ages. This is explained by Gonzalo Lira in his blog entry Why Corporations Matter, Part I. It's a good read. The Antikythera clockwork from ancient Greece is amazing.

I first noted this blog entry of Mr. Lira in the iTulip thread How Hyperinflation Will Happen.

[c1ue]

Re: 8,849: Has the world turned its back on Nikkei 225?

Yes, this is why the US government is anticipating Japan oil use to decline by 20% within 10 years. The Japanese have been in a peak oil panic for a decade now. The research is starting to pay off.
The single most important thing they can do is improve the earthquake resistance of buildings so that when the overdue big one does come, there will be much less damage.
There was a set of public housing buildings near my station that REALLY needed to be replaced, and there are now very nice apartments there, but 10 times as many, in much nicer buildings, built to a much higher earthquake standard. Because construction technology has improved so much over the last 20 years here, you can tear down an old building and put one up with 10 times the floor space that is much more quake resistant. After the horrible damage in Kobe in 1995 (Although that was kinda a special case with the mountains reflecting the quake waves back so there was interference in unfortunate places with accelerations of minus 2 g, I think. I saw entire 5 story buildings that had been flipped in the air and landed in the middle of an intersection. Just inconceivable.) the engineers immediately started putting full metal jackets around all the columns. Hopefully, the columns will therefore not fail.

I don't disagree Japan has put a lot of research into oil efficiency, but it is not clear that it is paying off.

Electric vehicles might not use oil, but they do use electricity. Japan doesn't have any large scale sources of electricity from present day technology: oil, coal, natural gas, uranium. Solar might theoretically help, but powering an electric vehicle is 2 orders of magnitude greater than powering a household.

As for earthquake resistance - frankly I consider this a sham. The real issue in most of the major cities in Japan isn't the buildings, it is the ground. Between landfill, natural gas pipelines, water pipelines, and population density - better earthquake resistant buildings would just net a nice fairly empty burned out shell of a city post earthquake as opposed to piles of rubble. Not sure how burning/starving/thirsting to death is better than being crushed under concrete.

I think one of the problems is that Japanese food is a VERY acquired taste.
I hear from friends in New York that there is a big sake boom, but sake only goes well with Japanese food, I think.

Given that there is a tremendous variety of Japanese cuisine beyond sushi/ramen, I don't agree that Japanese food is an acquired taste.

Tonkatsu, for example, fits quite well with American meat eating standards.

Secondly I would note that even foreign food in Japan is almost universally extremely high quality. The best Thai food I've had all over the world outside of select places in Thailand is in Japan. The best Spanish restaurant I've ever been in is in Tokyo. I would avoid all Mexican places there, but otherwise I think Japanese chefs for foreign cuisine are more anal about their product than the "natives".

Sony is so hurting. They should have progressed from the walkman to the ipod, but I guess they did not understand the computerization that was coming. They are getting creamed in the TV showrooms by Sharp Aquos. I have seen, after discounts, 40 inch Sony Bravias, new models, going for $700 in Akihabara. By the way, if you are in the market for a big flat screen, take a look at the Aquos. The Quatron 4-color picture is unbelievable.

To my understanding, only LG, Samsung, and Sharp actually make LCDs these days. Sony's are just rebranded Samsungs.

As for Sony's overall loss of position - it can be mostly blamed on the Playstation.

The over-focus on the Playstation - negated by the Wii, combined with a massive failure to win a share in the iPod market (doubly odd given Sony's entertainment IP ownership) is why they are where they are.

I'm not sure why they are losing out. The management is of course not internet savvy, and there is the huge language barrier that has only recently been partly mitigated by Google search and translation. Even those with graduate level technical English translating skills cannot read something like iTulip at all. Every businessman I said to in 2007 that we were going to have an oil spike, a housing bubble crash, a dollar drop of more than half, and a depression laughed at me. Now when I tell them something, at least they go poking around the net.
There is a very interesting piece called "I, pencil".
http://en.wikisource.org/wiki/I,_Pencil
The Japanese have only about 100 million speakers with whom they can draw upon and interact with easily.
English speakers have more than a billion.
This is one reason I think that while the economy will be bad in the US and Japan for the next decade, maybe about 2020, if we are diligent, we will get a huge boom because of technical progress once everyone can communicate with everyone else via good translation software. Then, it will be billions of people trying to solve problems.
I think we will get to Star Trek world, well, at least some of us, where food, clothing, shelter, medical care, and education are nearly free, and life expectancy is over 100 in very good health.
I see this kind of speeding up in all kinds of biochemical work where problems that used to take 10 years now are solved in a week. And we are about to unleash autonomous computing onto these technical problems.
The great danger is that some idiot somewhere will make a bioweapon.

There is probably some truth to the breadth of population, but really I see the true problem of Japan being branding. If France - a nation with half the population of Japan - can build world spanning companies on wine, perfume, makeup, and cheese while a subsection of the UK can grow to dominate an entire market segment (Scotch), I fail to see why Japan cannot find similar niches to build upon.

The failure in this case is entirely due to Japan's "bizarro" view of the world - or to be precise Japan's inability to understand how the rest of the world is different than internal Japan.

Cell phones are a perfect example: Japan has had (and still has) cell phone technology far in advance of anything anywhere else in the world for decades. Yet there is not a single worldwide brand if Japanese cell phone. The only companies that even tried were Kyocera and Sanyo - 2nd tier players in the Japan market. Sony doesn't count - it outsourced almost all its actual development outside of Japan.

Samsung on the other hand has gone from a cheap clone cell phone copy maker into a worldwide brand as has Nokia.

In fact I considered forming a marketing company to push the Japanese government, or at least specific Japanese industries, into embarking on 'Got Milk' type marketing campaigns.

But my present opportunity is better I think, and it isn't clear anyone is even trying to do the above much less knows the levers to have a chance to make it happen.

Time enough should the present opp fail.