I can go with the general theme of what you're saying although I'd dispute some aspects of it. High suicide rates poverty etc. Japan didn't collapse in a heap but it didn't really recover either when it should have. It's biggest mistake in the eighties was not allowing companies to fail and carrying the debt into the future in the belief growth and inflation would vaporise that debt over time. Reasonable assumptions at the time but a policy that should have been corrected as it became obvious it wasn't working. Instead Japanese stoicism and cultural characteristics saw them persist in the belief that more time would resolve these issues.
In the meantime quality of life and lifestyle could be maintained, certainly on the surface, by a steady diet of debt. Japan reminds me of the gambler who funds his bets with debt and keeps doubling down trying to work the odds of just one win will correct the situation.
I can go with most of Abe's 3 arrow strategy especially competitive reform. The problem he faces is that if one arrow misses the others are likely to miss as well and he's out the door. That means failure would likely see a reversion back to the days of old in terms of governance. Would the corporate power brokers be able to neutralise him politically and strengthen their already tight hold on their respective commercial markets?
If global markets where in better shape I would give him half a chance of making a difference but in reality he has too many forces aligned against him. China, S Korea, Taiwan and the EU aren't going to sit by idly and watch their market share dwindle in the face of competitive currency manipulation. In a healthier global economic situation they might have given Japan some wiggle room to maneuver but given the animosity going around I tend to think if anything they'll do their best to complicate any attempt at recovery.
The biggest concern at the moment is not decimating their banking system. Banks hold huge amounts of JGB's which when they hit 1% as they have compromise bank Tier 1 ratios and puts them in the technically insolvent category. The BOJ has had to support the bond market on all but 2 days since launching QE. Volatility is off the clock and spooking investors. While the BOJ wanted a flow out of bonds and into other investment areas it doesn't want that flow to turn into a flood it can't control.
One of the weak points in its strategy is it can't control both its currency and JGBs at the same time. It's one or the other. BOJ is trying to back out of more purchases of bonds but the market is spooked and the BOJ has to support the bond price by buying when it doesn't want to. If it doesn't support the bond price rates go up jeopardising banks solvency positions. If it's forced in to supporting the bond price it risks pushing the currency lower and possibly loosing control of it.
Another problem is that this volatility is creating problems in other markets. I can't see this being tolerated for too much longer. Everything is pointing to something breaking soon. Instability is increasing and if something snaps nobody really knows how it will play out.
One of the scariest aspects of this experiment is that no one really knows how this will work out. There is no central bank intervention in the last 5 years that has improved or resolved the problems that led to GFC08. At best they've stuck us in a holding pattern. I have no faith in the BOJ's plan which is simply a much bigger version of past global CB intervention strategies that have failed to deliver. Why would theirs be any different
Latest trade data is not supporting the Abenomics strategy. On the contrary.
Japan trade deficit soars 69.7% in April to ¥879.9 billion, from April a year ago, the tenth months in a row of trade deficits, the worst series since 1980, and the worst April ever. For each of the last three Aprils, the deficit was worse than in the prior one; same for March, February, and January. The trend is relentlessly awful. Abenomics is deepening the hole, but it’s digging at a faster rate. The weaker yen nudged up exports 3.8%, but imports jumped 9.4%. Don’t blame oil: imported crude oil volume dropped 2.2%. Exports to China stagnated, but imports jumped 13.3%; the deficit skyrocketed 60.2%. However, exports to the US rose 14.8% while imports stagnated; the trade surplus leaped 32.5%. Japan exports twice as much to the US as it imports. Perhaps someone in the White House will someday get Japan to open up its auto market. The trade balance with Western Europe flipped from a surplus a year ago to a deficit; exports fell 3.5% and imports rose 11.4%. Abenomics and the money-printing binge have heated up consumption of imported luxury goods and other items that can’t be produced in Japan. For the rest, Abenomics appears to be a giant miscalculation. The graph for the years 2011, 2012, and 2013 shows the worsening trend:
And on the other hand –
http://www.nippontradings.com/japan-real-estate/38-percent-rise-in-japan-property-investment/
he's not doing the wrong things, I'll give him that much. And it's way too soon to evaluate, so not seeing all the positive movements in the market doesn't really worry me that much – I'm seeing enough of them considering these are early days.
time will tell, freckle. and a downturn doesn't really concern a long term real-estate investor to the extent it worries a short term player. I know you think differently, but I'd examine all of this two or three years down the track to have a real grasp of how things are going, seriously. Give it a rest.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Ziv wrote:time will tell, freckle. and a downturn doesn't really concern a long term real-estate investor to the extent it worries a short term playerIs this time frame long enough for you.
or how about this one..
or this one…
the smiley faces version..
Love the top one…at least now you admit to speculation and crystal balling – up until now you kept calling it "mathematical certainty". I quit, have fun playing with your graphs.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
zmagen wrote:I quitI accept your surrender.
I swear, you're the cutest troll I ever met, freck. Priceless.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Freckle
Very interested in a lot of the comments you are making. I have recently moved overseas from Aus to Dubai with work and it has openned my eyes to the global market place.
Previously all my research efforts were in Aus property but I am more diversified now and I am looking at other investment clases. The only problem is I am very novice in these areas and was wondering if you could give me some pointers or point me towards some resources to better educate myself or even analys??
With Japan, do you believe, as some are saying, that the Aus property market will follow in its downward spiral? Also if you could explain to me how buying different currencies (ie Yen) and then purchasing assets works that would be great.
As I said very novice at this stage so any help would be fantastic
Cheers
ps any thoughts on Dubai market?
Been seeing alot of these in Dubai – http://www.china.org.cn/world/Off_the_Wire/2012-09/17/content_26539412.htm
Quote:…a number of brokerage firms disappeared with the money they should have had transferred from tenants to home owners. Gulf News reported earlier this month that two broker firms, MFRE and FHS, were owned by a 38-year old Emirati national, although the Real Estate Regulatory Authority or RERA allows one person to obtain one brokerage license…One of the reasons I chose to work mainly japan is the confidence that this sort of thing almost never happens there…although a realtor does lose an arm to a katana attack on occasion
have you heard/had similar experiences in your time in Dubai, se7en?
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
i AGREE.
Why get all worried about whats happening in another country or whats happening down the street, the only thing people should be interested in is how they are going to make another dollar and what changes they need to make to there life/business etc to keep turning the wheels.
If Japan goes down then all these negative people will probably help Australia follow as they have been talking negative so long and will probably make a snowball effect, why talk negative, I don't see the point, talk postive and help the economy go ahead, it is better for everyone.
Remember a few years ago, USA was the big talk, it's gonna colapse it will never recover, bla bla, look at it now it's in recovery mode, then Europe was the big talk, plenty of my mates that live there say they have plenty of work on and making plenty of money, Then Australia mining was the big talk, it's going to collapse Au, what a load of C.ap, sure its going down but it will not collapse, now Japan is the big talk, where to next, Who cares, just talk positive and make money you negative people or just talk negative and live negative, I no which one I would rather choose.
Its like the Gold Coast, Half price properties, 50% shaved off Gold Coast homes, what a load of cr.p, yea 50% was shaved of some of the over priced homes which were bought in the peak of 2007 and the people paid way to much for them, but there was not many at this price, some apartments also had a good hit but there was an over supply of them, some areas of the Gold Coast did not see any decline and actually increased in value but you did not hear about this from the negative, and some suburbs seen only around 10% reduction but then a lot of suburbs Au wide seen 10% discounts, its just the media etc making the stories sound extreme but it is a load of rubbish, now only a few years on we are starting to hear that the Gold Coast is making a come back, prices are recovering, to be honest I see more money to be made on the Gold Coast than in any other city over the next few years, there is lots starting to happen here.
So people don't get worried about what is happening in Japan, just work out what is happening around you and how you can make money etc.
Think about it, if Japan went bust today, how would it effect you, it probably won't other than you getting worried over something that doesn't effect you.
It's like the elections, why do some people wait to see what is going to happen before they commit to anything, what ever happans happans and we all still need to push forward otherwise we will be stuck in behind closed doors all our lifes.
I wouldn't get too concerned Keiko. 90% of investors follow your advice. 80% eventually do their doe often within the first few years.
The power of positive thinking is a wonderful thing. Unfortunately it rarely changes financial outcomes. The value of negative sentiment is understanding when it will adversely affect you and getting out of the way in time.
se7en wrote:ps any thoughts on Dubai market?The Syrian conflict is the threat at the moment. If it widens it could engulf most territories in the Persian Gulf. The UAE sits on a strategic peninsular (Strait of Hormuz).
The problem you have in that region is that it can be all rainbows for some period of time but given the current ME situation and the US vs Iran thing it could all turn to custard in a heart beat. Given the uncertainties you have to look at the region as a speculative gamble rather than a long term investment.
The other risk is the impact any global economic correction might have on the wealthy given that it's paradise central for the rich and famous.
Does that mean my snowboarding trip next year to Japan will be cheaper?
You called it the persian gulf – im impressed!
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
nah the us vs iran thing has been going on for ages and it will (unfortunately) never change. Iran is not Egypt, Syria or any other middle eastern country. It has a devastatingly complex and intertwined government structure.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi zmagen
Thanks for your reply.
I have heard both ends of the story here in Dubai, there were many investors who purchased properties on the Palm for instance and sold shortly after and made mega profits, I'm talking purchased for $2m USD and sold 24 months later for $6m USD. On the other hand I have heard of investors buying into areas only to find that the Sheik plans on redeveloping it and they have to pack up and leave.
Like anywhere though if your smart I believe there is a reasonable way to reduce these risks, there are areas that are much more established and have amazing yields and of course I would only deal with reputable professionals, I would not deal with Emirati locals unless I absolutely had to and I would do a lot of back ground checks if this was the case.
Dubai is a work in progress so naturally things are changing all the time, that combined with the political system means that risks are naturally higher but gains are also much higher if your smart about it.
Dubai is definitely back on the move that is for sure, I work for a big construction company and development is snowballing very fast, also with Dubai 2020 almost locked in now there is huge potential for a massive population growth again.
Only time will tell I guess.
Cheers
p.s. I love Japan, been there twice now, would have to be one of my favorite cultures in the world
Yes I would definitely agree with this, I have always been intrigued with Dudai's relationship with the Arab nations that are in conflict with the US and there is no doubt that there are other risks that need to be considered here in the UAE compared to other parts of the world but the tax free element and the amazing yields here does make it temping especially compared to things in AUS at the moment.
I have always said that if I ever purchased anything here and saw any growth I would sell and take my money and run, I wouldn't stick around and get greedy. It definitely wouldn't be a long term thing.
Thanks for your comments Freckle much appreciated, any other advise please let me know.
Cheers
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