Japanese Economy recovering after 13 years of slump ?

[Maciamo]

Good financial news for Japan. The Nikkei 225 average has almost come back to 10.000 after it had fallen under it last summer, eventually falling under 8000 in April. Since May, stocks are on the increase again.

The number of bankruptcies have improved since last year too.

Tokyo stocks open higher
Monday, July 14, 2003 at 12:41 JST
TOKYO � Tokyo stocks rose Monday morning, led by export-oriented technology issues after rises in U.S. equities on Friday.

The 225-issue Nikkei Stock Average rose 38.50 points, or 0.40%, to end the morning at 9,673.85. The broader Tokyo Stock Price Index (TOPIX) of all First Section issues gained 4.10 points, or 0.43%, to 949.88. (Kyodo News)

Bankruptcies in Japan down 9%
Monday, July 14, 2003 at 14:10 JST
TOKYO � The number of corporate bankruptcies in January-June 2003 dropped 9.0% from a year earlier to 8,984, but it was the eighth-highest since the end of World War II for the first half of a year, Teikoku Databank Ltd. said Monday.

It is the first tally below 9,000 in four years for January-June, reflecting corporate efforts to avoid bankruptcy and an improved financing system in the public sector to support struggling businesses, the credit-research agency said. (Kyodo News)

[senseiman]

I doubt Japan is in for a major rebound any time soon. The Nikkei has gone up a little bit in the past week, but it is still way below where it was only 2 years ago.

[Maciamo]

Just catching the audience attention, buddy. I know it's still too early to say, but the morale has got a bit better recently at the stock exchange.

[senseiman]

I guess you gotta keep a happy face in hard times. I wonder what it wil take for Japan to really recover from its economic problems though. Hope it gets better, but its hard to be optimistic.

[Eisuke]

The Nikkei is now at 10,000.57. I think the Japanese economy is gradually going in the good direction, but the bad world economy isn't really making it all much better. I think the economic reform plans of Koizumi need to be done in order to get a faster economic recovery.

[noyhauser]

not to keep spreading doom and gloom, but I'll wager at least 1 Euro or one dollar that the Japanese economy is going to keep slumping. The Nikkei shouldn't be used as a index of Japanese recovery. Its dominated by big companies like sony which produce most of their units outside of the Japan for export into the US. The only reason why its doing better is because consumer spending is marginally higher in the US this year over the recession years in 2000~2002. Its really sad to watch Japan go from an economic powerhouse of its own accord to being utterly reliant on the domestic market of the United States for economic growth. Koizumi has actually adversly affected the domestic market by artificially keeping the Japanese Yen low against the dollar. For a state that is utterly reliant on foreign trade to keep it alive (such as 40% of its food, most of its raw materials and petroleum ect), lowering the Yen decreases the ability of the consumer to pay for these objects, which makes them spend less overall. Traditional Macro economic leavers such as interest rates don't work, as the interest rate now is at zero percent with no growth. Even making more money hasn't work as the Bank of Japan has been buy more bonds and deflation continues (as well as no growth). Government spending has been compeltely mis accrued in to more construction projects which doesn't help consumer spending. And the limitless money pool that Japan has is fast drying up Public Debt now is at 135% GDP. Although most of this is locked up in the Japan, its getting to the point (called the debt trap) where growth in Japan cannot offset the cost of the debt, which is a very scary prospect. Here I'll quote a Economist article because it says it better.

Last, but not least, there is the danger of the so-called 電ebt trap�, in which rising interest payments swell the government痴 budget deficit to such an extent that total debt continues to grow even when the government is not overspending."

Right now Koizumi has balanced the situation... barely. but if he doesn't start consumer spending in Japan, (which the current growth has not done, as most of it is in export sectors). The big problem is with the banking sector where Koizumi has done NOTHING to resolve the banking crisis, as a result we still have Billions in bad loans, which is still sitting on top of a property bubble. The problem is that if the banks start recalling loans, they will have to take the collateral, which in most cases is land. But the land is still overvalued (or was valued before the last property crash), so the banks have to admit that they're land is valueless and the loan is gone, so they have overstate profits. Banks have also gone and started mis-accounting financing, such as counting future tax breaks as profits which is a no no. The Resona bank's near crash last year came close to toppling the market, and Koizumi hasn't done nearly enough to adress the situation. I'm going to stop it there but I could go on for another 30 minutes about how bad the situation really is.

Japan needs to start doing some major reworking in the near future that will have some very tough choices. Petty politics continue in the LDP and yet they are staring into the abyss. Its scary and sad when I saw the platforms of the other candidates going against the Koizumi in the LDP party. All three supported more public sector spending on infrastructure, as petty pork barrel politics. They only worry about getting elected, not the country itself.... Sigh. I guess I won't be moving to Japan anytime soon.