>>South Korea, the world's tenth-largest economy, was
>>effectively bankrupted by the withdrawal of Japanese >>money, he adds.
>The BIS stats on the SE Asian crisis show net movements >of $100-120
>billion a year, but this includes US and EU >loans, not just Japanese
>banks. Japan spent $30 billion >on the Miyazawa bailout to restart SE Asia,
>and Korea's >problems were due to a liquidity crunch, not dependence>on
Japanese funds (Korea has taken care not to depend >on Japanese capital,
>for good historical reasons).
No doubt since times have been hard in Japan, they have invested less in S.K. (and not just money parked in equities, or in money used to take over existing companies, but in actual start-ups of joint ventures and factories, etc), but everyone is going to China to get their stuff produced, Korea included. We've seen this here in Fukui, where textiles, even high quality sports wear, went to Korea and Taiwan, and then China. The same with eyewear manufacturing, which Sabae City here used to be a major center of. Not anymore, as it's all gone to China and even the Koreans are getting driven out of the business.
Perhaps if E. Asian (like Asia) and SE Asian countries had held yen reserves in significant amounts, they could have held off the waves of currency speculation that helped feed the so-called Asian crisis. Imagine what sitting ducks they were for Soros and the like. The only thing those countries could do was buy or sell or hold two currencies. If their foreign reserves had been split between dollars and yen, they could have better foiled the speculators. The US, FOR OBVIOUS REASONS, has always tried to keep the yen from becoming a common currency in Asia, even if only for coordinating intergovernmental monetary policy.
>>Japan is the world's main source of capital.
>Wrong. The EU is coeval (the stats often leave out >Switzerland, but Swiss
>capital is intricately tied to Eurocapital).
Yes, but the EU will have to pass the 'duck' test of the nation state: if it quacks like a duck....
>>Radical deregulation of distribution and retail and better legal
>>accountability are other moves that make economic, if not political,
>>sense.
>Japan is a densely packed, crowded culture, so it'll >always have an
>expensive retail infrastructure -- >there's no space to warehouse stuff, so
>you get this just-in-time infrastructure, lots of >things moving all the
>time.
Gotta love that one about legal accountability coming from the US of Enron now. It's a myth about the distribution and retail needing major restructuring (why should it be top-down in a market economy anyway?). Imagine the US president being told by a foreign government that he needs to restructure his economy. This is what always gets me about western calls for reform and restructuring here.
Like Japanese companies who have to deal with domestic and foreign competition and the next business quarter are going to listen to a prime minister telling them they have to restructure because the US says so.
Retail has changed considerably in the past decade, and this is one other factor adding to deflation. Some companies bypass the old distribution, open up new retail space, and import and sell directly to the consumer at much cheaper prices (and this fits right in with the ultra-strong yen of the past decade). For example, clothes sold at discount department stores (of better quality I might add) are often cheaper than in the US now (the Uniqlo phenomenon). Even more expensive imported stuff can be cheaper.
Also, one often-cited stat is the sheer number of small retailers, but MOST Japanese buy MOST of their goods at large stores operated by the BIG retailers (like 80-90% of everything bought is bought at the top ten retailers). Going to a small shop in your neighborhood is more like an act of kindness to an old couple you know more than anything else. I go occasionally because I hate to see whole sections of a once thriving shopping district looking like a ghost town. I also don't drive much and can't stand the shopping centers out where the rice paddies used to be.
>>Nissan was losing money for most of a decade before Carlos Ghosn stepped
>>in
>>as president. Within two years he took it to record profits.
>They lost small amounts of money over the decade, not >huge amounts.
>Renault shut down some unprofitable >plants, sure, but Nissan's
>well-trained, world-class >employees were the ones who rescued Nissan
>(ironically, Ghosn himself takes great care to >emphasize this point).
Nissan,like so many Japanese car makers, were reined in during the 80s by US and even worse, European protectionism--yes, there were quotas, and yes, they were abided by. Then Nissan got hit by a slump in design (this happens at a lot of manufacturers periodically), a constantly higher yen, and slippage in the first most important market for them--Japan (the rise of Honda among young drivers goes with Nissan's decline, more or less). Their investments in Thatcher UK turned out to be something of a debacle as well.
Ghosn is the CFO, but he represents Renault's interests, so he is pretty much in charge--in close collaboration with the CEO (who is Japanese). Ghosn's victories have been major cost-cutting, and the realization that Renault can benefit greatly from Nissan's know-how in design and manufacturing.
The profits that Nissan have reported are hardly records. They are encouraging, and so far the Renault-Nissan merger, which everyone scoffed at, has proven far more equal and harmonious than Daimler-Chrysler (which now also controls Mitsubishi).
>>The world can only hope that when George W. Bush visits this month, he
>>will
>>focus those Japanese minds.
>Forbes: the capitalism of fools.
You said it. Charles Jannuzi