Common Cents

Bought and Sold

Ralph Murphy

(10/1) Japanese Prime Minister Yoshide Suga was sworn into office in mid September following ShinzÇ Abe’s abduction citing I’ll health. The former Chief of Cabinet Secretary paralleled Abe’s administration in that capacity from 2012 when the Liberal Democratic Party assumed power. The change comes at a time of reportedly high investment and earnings losses blamed on the Covid-19 scare, but broadly should be reviewed to general interest in accuracy as linked economic indicators like employment or inflation haven’t been affected as would be the case if the downturn had happened.

Sugar’s initial foreign dealings have reportedly resumed regional ties to relatively poor neighbors in the Association of South East Asian (ASEAN) area to include Vietnam and Indonesia, but more important.y to cost reviews is a resumption of dialogue with Beijing and travel accords linked to regional trade alliances. That relationship has historically proven very costly to Tokyo in varied trade understandings tied to poorly planned or executed cash flows or investments cross nation.

To backtrack in perspective on the regional trade relations Japan has been a staggering success of industrial growth and expansion anchoring the otherwise impoverished area with consistent wealth. At near $ 5 trillion dollar annual reported earnings the export oriented economy’s has however suffered from erratic and costly federal trade flows that belie the regional focus on varied output linked to a keiretsu or group of interlocking businesses and shareholders who share a common bank in complex regional associations that generate predictable and varied goods and services output for domestic and foreign markets.

There were six primary keiretsu groupings listed to Japan that had developed since a Meiji restoration or imperial role was advanced in the mid 19 th century. Production seemed relatively primitive prior to the Second World War, and the system was altered by subsequent structural alignments. Notably automobiles were considered relatively independent of them but shared their trade interst or services in provision or contracting. While strong to internal markets and regional understandings the keiretsu managers appeared very vulnerable to losses or manipulation at the increasingly impersonal or federal level and that became critically important in recent years when tied to the banking as merger actions proved recessionary costly. Those were losses that could have been easily avoided there as elsewhere with closer auditing of cash flows consistent with accountable return on investment and not political objectives.

Former Prime Minister Abe had advanced a " three arrows" policy of what had been fairly standard though largely discredited Keynesian vague payment proposals or inflation measures that " winged" spending in the deficit era. It included quantitative easing or monetary expansion, there was expanded fiscal or federal spending and structural reforms affecting import or exports controls that affected policy. The team notably adopted what was known as "negative interest rates" that had swept up to Europe in a nominal concept of understandings unclear to to the casual readers as the concept so unique to finance since the 2016 introduction in Tokyo. It wanted to buy corporate bonds but the result isn’t clear as if it had been successful irregular inflation would be high and that hasnt proven the case, reflationary had been an objective of "Abeonomics" but not realized for some reason though relatively simple with Treasury provision.

The negative interst rate forces the depositor, there a Japanese Government Bond holder to pay to store their money. Obviously there are countless better ways to invest it so the actual participants seem very closely linked to internal policies. There was also a " consumption tax" introduced recently of .10% or a federal sales tax similar to a Value Added Tax in Europe of about the same rate as the negative .75 % the Japanese investor would pay to store their money. The taxes might be linked there as in Europe. It’s not clear where the tax money goes and nominal concepts in economics are retouinely based on precedent factors or preconditions which don’t necessarily reflect prevailing circumstances.There could trade barriers that are no longer relevant, inflation or even hypothetical scenarios added the real economic indicators would deflate to reflect equilibrium as brokered by the actual price and quantified sales value.

The problem there as elsewhere is again impersonal authority brokering investment transfers of stored earnings that when applied to federal controls seems manipulated or even simply stolen as the keiretsu type focus so uniquely regional, but export market need implying a leap to federal authority also a necessity. They have to work together better but are almost slipping back into a China friendly theft pattern that I think has been identified by policy officials and thwarted as indicators like irregular inflation or unemployment are in check or predictably low. If the recessionary pressures presumed in the earnings reports were accurate there would be empty shelves of basic goods, long lines for scarce commodities, unemployment lines as well and the money would be debased. None of that has occurred although the press went right into the recessionary understandings consistent with a very awkward bailout stratum that appeared " dead and buried" with Dodd Frank repeal in 2018 that reestablished bank funds closer to investors and away from impersonal larger banks that squandered it.

In Japan’s case the six keiretsu consolidated to three main banks of very high assets. Mustubsisji UFG for example was listed as having close to $3 trillion in assets and may have been victim to consolidation theft similar to Hong Kong bailouts in the strategy New York bank groups used to bailout Europe Recessions to Tokyo could be explained by that type theft since market factors to include supply or demand elasticity were not otherwise affected. There may be recent efforts to restore the original six charter banks. The car makers, clearly of real weight there may have affected the federal banking. Clearly their operations outside keiretsu created new sociopolitical alignments

To statistics the primary trade partners listed to Tokyo included on volume though not earnings about 57% to regions Suga is now pursuing in his western pacific. Over 20% is linked to North America but the industrial goods of varied complexity to include electronics and autos are of higher retail value and quality. The rest of the trade goes abroad with Europe included to the more distant trade groups. There are varied statistics and constant market dynamics and Japan does consistently enjoy a trade surplus with resultant need to invest it.

Impersonal investment there as elsewhere is always risky, but the odds of a return based on proficiency or competence are routinely far better when applied to known markets based on experience or depth of understanding. That routinely doesn’t happen when the federal government becomes even remotely involved. They could use the market tie for almost any domestic or foreign extraneous need or interest and the conventional return would be lost to that context. It takes mental effort to sift through available trade opportunities rather than adopt wrought patterns of precedent , but is worth the mental anxiety in tapping a new opportunity if investor reward shows a market can be created or expanded.

Concerns there as elsewhere also include varied export promotion programs as the External Trade Organization, it notably is linked to infrastructure or their infamous high speed " bullet trains" is varied or questionable value in lower income regions or even those that afford alternative travel options as planes for the same distance requirements. Again the trade ties can advance parochial internal interests and are far from optimal despite projection or investments.

The main point that should be drawn from the varied inferences is to be wary of the willingness of the older guard press, and by that I mean pre Dodd Frank repeal bank outflow to back the theft culture and processes of their era. Those patterns tied to overcharges in tax policy or just transfers are being reported but simply not acted on to that pattern as they would prove recessionary as described. The indicators don’t show its being followed up to that measure. The politics would go nauseatingly immature or even"p "sing song" in that environment as well and we’d have to tolerate it. It’s less likely to happen in a regular sales environment void of the theft.

Japan to federal prospect seems to be slightly listing back to the deficit spending patterns that don’t reflect its broader foundations or interests. Despite that tug there is some type of control authority that is keeping it from the theft patterns or dispersal that would guarantee a recession there if trade or outflows were not checked. It’s real and not nominal balances dictating policy, long overdue and reflected in earnings not conjecture by investors in their fields not camps.