Tuesday, April 17, 2012

Japan's Economy

In an effort to keep the exponential trend in exponential trend failure charts alive, I present you with the following chart.

Click to enlarge.


April 17, 2012
Japanese Engineers Find New Life in China

Sony, Panasonic and Sharp — Japan’s three main TV manufacturers — are expected to have lost $21 billion between them in the fiscal year that ended March 31, partly because of Korean competition.

Many of the Japanese engineers finding a second life in China do not have the expertise in cutting-edge technology that would deal another crushing blow to Japanese manufacturers, analysts say, but the long-term impact could be severe because they will give Chinese manufacturers the skills to make high-quality goods efficiently.


See Also:
Retail Sales vs. Money Supply

Source Data:
METI: Current Survey of Commerce
MIAC: Consumer Price Index


Scott said...

Thanks for posting. This is shocking. Without heavy industry, Japan is a hollow shell. A major crash is imminent...just don't know when.

Stagflationary Mark said...


I was expecting to see more housing bust damage in the data (starting around 1990). The real impact didn't appear until about 2000 though.

Makes me wonder where we will be 10 years after our housing bust. Sigh.

mab said...

Makes me wonder where we will be 10 years after our housing bust. Sigh.

Similarly, Japan's persistent CPI deflation did not occur until years after the early 1990s real estate bust.

I still maintain that Japan is the model for the U.S. Not an exact fit, but close enough for gubbmint work. Who can say for sure?

ps......unlike many others, I do not see a "bust" in Japan's future. (Yes, I like to heckle bond market "vigilantes" like Mish and KD). If our outcome differs from Japan's (a real possibility) it will be because of politics - the dishonesty and deceit in the U.S. is our major vulnerability (far worse than in Japan imo).

Troy said...

Being a Japanese speaker and having lived there in the 1990s I of course have a special interest in the country.

It is certainly a present prospect that China is just going to drink Japan's milkshake this century.

In 2020, Japan's college-age contingent will be 3M men.

China will have 45M.

Say the top 1% of a society are the people who make the advancements -- Japan has an annual pool of 30,000, China's is 450,000.

Japan is at the end of the world so there's no trade in being an entrepot -- China just drop-ships stuff straight from GZ anyway.

The hidden advantage Japan does have comes from having won the 20th century, however.1960-1990 was an immensely profitable period for Japan and they're now sitting on an immense -- and largely "hidden" -- cashpile of world savings, $3T worth. This may only be $25,000 per capita, but it is better to be owed $25,000 than owe $25,000.

Japan blew themselves up 1985-1990 the same way we blew ourselves up simultaneously with the S&L crisis and then again 2002-2007 -- unbridled land speculation.

But at least what they got for a lot of that money was some shiny new fixed housing and commercial properties. This is the typical Tokyo build-out -- and they have 1000+ square miles of this development in Tokyo alone.

I didn't figure this out until later, but the 1980s land rush was largely demographically-driven -- their 1950 baby boom was forming households in the late 1980s and needed their own housing.

But Japan had a TINY baby boom compared to us, just a blip in a 3-4 year period that crested in 1950, while we have an epic demographic tsunami barreling our way, the center of mass was born in 1955 but the crest was 1957 and the tail won't come until 1964 (and thanks to 40 million legalized immigrants this will be larger than just the birth numbers indicate).

Due to these generational differences, Japan's baby boom echo actually came in the early 1970s, right in our demographic trough (our lowest birth year was 1973, which was their highest).

Our baby boom fully replaced itself (plus we have those 40M+ immigrants. . .) and our echo population is currently busy making its babies (though with the recession it seems they are slacking here too).

Japan's echo is in their late 30s now and is NOT replacing itself the 10M peak cohort only made 6M babies, and Japan's net immigration level is minimal.

My thesis is that what this means for Japan is that this century it will have to make do -- with more.

Aside from the Fukushima disaster -- that really did a number on ~15% of the landscape, and still has the potential to wipe out the Kanto altogether if they somehow lose the ability to continue cooling those spent fuel pools.

Troy said...

Say the top 1% of a society are the people who make the advancements -- Japan has an annual pool of 30,000, China's is 450,000.

oops, my numbers were 5-year cohorts. In actuality there were ~600,000 male births in Japan in 2000, so the annual intake of technical 1%ers is 6,000, not 30,000.

That, is rather sobering, innit.

Anonymous said...



Troy said...

Anonymous, that graph is deceptive.

The widest-angle picture is http://research.stlouisfed.org/fred2/series/TCMDO

or in per-capita terms: http://research.stlouisfed.org/fred2/graph/?g=6xX

However, let's remove TBTF from that, since their debt structure clouds the picture too.

Without that debt they owe each other, systemic per-capita debt is:


Converting per-capita to per-wages (to remove inflation):


gives the clearest picture of our path to ruin. There were two great leverage events, the 1980s under Reagan and the 2000s under GWB.

Stagflationary Mark said...


I still maintain that Japan is the model for the U.S. Not an exact fit, but close enough for gubbmint work. Who can say for sure?

Hindsight is being relatively kind to that theory, much to the dismay of the hyperinflationists.

On the one hand, conservative stagflationists did fine. All they had to do was buy oil, gold, or TIPS.

On the other hand, conservative deflationists did fine too. All they had to do was buy long-term nominal treasuries.

It is a curious situation that both groups have done well. I'm not sure it should be surprising though. Both groups do have something in common. They both felt that real growth (inflation adjusted) would be a problem and that real yields would therefore fall.

Stagflationary Mark said...


My second career job was working for a branch office of a Japanese landscape architecture company (here in the USA).

My boss lived in Japan for a few years. I don't have your knowledge of it but I do have more than a few anecdotal stories that he shared with me.

That job ended about the time their housing bubble popped. Hardly a coincidence. We were mostly just a trophy for them to put in their annual reports I suspect.

Stagflationary Mark said...


I have to laugh at the picture within your link of Bernanke at the chalkboard.

What can I say? I like gallows humor, lol. Sigh.

Stagflationary Mark said...


...gives the clearest picture of our path to ruin...

Your chart would be even clearer with the cookie monster pointing out the trend.

Sorry, more gallows humor.

Fritz_O said...

"...fixed housing and commercial properties. This is the typical Tokyo build-out..."

Those outboard mounted drain pipes for the balconies crack me up.

Here in the US you just let it pour on your neighbors (below).