Tying Up the Loose Ends - A Conclusion

A wise person once said, "All good things must come to an end". Sadly, this will be my last post on the economy of Japan. Macroeconomics is almost finished. Throughout this string of blogs, I've reported on a variety of different subjects from agriculture to anime, monetary policy to cost of living in Japan. Each and everything tied to their economics. However, there are a couple of loose strings I would like to tie up.

Last Macroeconomics class we discussed different economical theories. I've decided to try and interpret what kind of economical policy Japan follows from what I have learned. In a way, the Japanese economy is similar to Keynesianism . Keynesianism states that government intervention is necessary in an economy. The government intervened when deflation is at its height in Japan. The Bank of Japan and the government both thought of a plan to get Japan back on it's feet.

On a recent note, Japanese Financial Minister Kan believes that Japan's economy is having a better chance of overcoming difficulties. However, even though the global economy is showing signs of recovery, the Japanese are still being cautious about what they do, so that they don't put their country in financial ruin for the long-term. Kan wants the stimulus package to go through and have banks give out better loans so it could stimulate money growth. Kan also wants the Japanese economists to learn what went wrong that caused this downfall in their economy so that they can prevent it later.

In my opinion, it's probably going to take a while for the Japanese economy to get back on its feet. However, the changes that they are putting in place is a good thing because if things can't change, they fall apart. Even though this crisis is at it's turning point, there is still a lot of work ahead for Japan. I only hope that they can learn enough from what happened to make sure it never happens again.

Source:

http://abcnews.go.com/Business/wireStory?id=10467374

Japan's Economy Coming Up From The Ground

They say that April showers bring May flowers. Well, this month of April, it looks as if Japan's economy is blooming from the rains of deflation. The Japanese government changed Japan economy's status from "improving" to "picking up". The past several months, Japan has been in an economy crisis with the high deflation and all. However, Japan is still cautious about being optimistic about the economy. It shows that the stimulus packages that have been dispersed are improving business and consumer sentiment. It looks as if there is a bright future for Japan's economy, and the flower is starting to bloom again. However, instead of using stimulus packages, where they could suffer inflation, they are just going to use reserves to combat deflaton. Japan has set aside one trillion yen in its budget in order to combat the falling economy. However, from this point in time, deflation is decreasing, but the Japanese officials are saying that it's going to take a long time still to be completely rid of deflation. I discussed about the Bank of Japan easing monetary policy in a few posts back, and it looks as if the Bank of Japan will ease monetary policy further. In my opinion, it looks like Japan is doing whatever it takes to improve the current situation they are in without having dire consequences. Even though it's going to take a long time to combat deflation, I have faith in Japan's determination to make their economy back to normal.

Sources

http://online.wsj.com/article/BT-CO-20100416-704253.html?mod=WSJ_latestheadlines

Is the economy of Japan recovering?

Earlier today, Reuters reports that Governor Shirakawa sees signs of "sustainable recovery. As you all know, Japan has been suffering a serious deflation these past several months. Also, I mentioned a few weeks back that Japan was looking to push monetary policy by creating more money for people to spend. Shirakawa thinks that pushing monetary policy is a bad thing right now because he sees the economy slowly getting better. The people of Japan were afraid of a "double-dip" economy deflation, meaning that the deflation was going to happen again. However, Shirakawa says that capital spending is increasing and corporate profits are increasing, so there is no need to pump money in the economy and suffer through inflation. Japan has pulled out of a recession last year just barely. Right now, Japan has a growing fiscal deficit, meaning that they are losing money to spend all the time. It has been said that Japan's debts are right now twice the size of the economy.

In my opinion, I agree with Governor Shirakawa. When I took economics my senior year of high school, one of the many things I learned about economics is that the whole economy goes through peaks and troughs. There is a cycle that will kill itself and then repair itself. Things have to change in order to grow. The economy will slowly get better naturally than if we pump more money into the economy. Then again, I'm only a student, but it seems more logical to just let it be if it's going to come back naturally.

Sources

Kihara, L (2010). BOJ chief sees signs of sustainable economic recovery. Reuters. Accessed on April 7, 2010 from http://www.reuters.com/article/idUSTOE63604Y20100407

Japanese Video Game Industry

Hello everyone! I've decided to take a different turn onto these blog posts this week. For the past few posts, I've talked about deflation, which is rather depressing. I haven't seen any real updated information that's any different, so this time, I'm going to talk about the impact of the video game industry in Japan.

Since the last 20th century, Japan's video game industry has been successful in many areas including: desktop gaming consoles (Nintendo GameCube, Sony Playstation) and portable gaming consoles, like the GameBoy. The American video game industry isn't as successful as the Japanese industry. The Japanese were the creators of the video game companies like Sega, Sony, and Nintendo. Nintendo released the Nintendo Entertainment System, Super Nintendo, Nintendo 64, Nintendo GameCube, and the Nintendo Wii, along with the portable GameBoys and the Nintendo DS. Sega created the Sega, Sega Saturn, Sega Genesis, and Sega Dreamcast; however, Sega fell apart shortly after the Dreamcast was made in 1998. Sony released the Playstation, Playstation 2, and Playstation 3. The three companies have tried to battle out with competition.

Now we're going to look at the Global Japanese Video Game shipments. In hardware, the Japanese made 510 billion yen, and they made 538 billion yen in software in 1997. That number has increased in 2005. In hardware, the Japanese made 873 billion yen and in software, the Japanese made 487 billion yen in 2005. Hardware is like the system, controllers, and so on. The software is the games. Therefore, to say, the video game culture has been very profitable for the Japanese. In the modern days, playing video games was not something that the "nerds" do. Since the launch of the Nintendo Wii, females and older people have found fun in the interactive experience.

In my opinion, the video game industry is going to keep growing and growing. Being a gamer myself, I find great joy in playing video games on my spare time. It relaxes me. These companies keep battling out the competition with different targets. Such an example is the Playstation 2. Sony put the DVD player in the Playstation 2 so that people who did not have a DVD player would buy their product, for a gaming system and a DVD player. The same has been happening with the Playstation 3 and the Blu-Ray player. Thus, nothing is going to stop the profitable industry.

Source:

JETRO (2007). Japanese Video Game Industry. Retrieved on March 27, 2010 from

Japan easing its monetary policy

Hello all! A couple posts ago, I discussed monetary policy within Japan, and what the bank notes represent. I discussed that the monetary policy is much like the United States, yet somewhat different. I've also discussed the current economic status in Japan. I was browsing the Internet looking for topics for today's post, and I stumbled across an interesting current event that ties a couple blog posts ago with this post from the New York Times.

The New York Times reports that the central bank of Japan is increasing the loan programs for banks in order to improved their "deflation-plagued" economy. Other countries in the global economy, including the United States, have been putting out stimulus packages with hopes to stimulate the economy, so that those countries can get out of the world-wide recession. However, Japan wants to consider flooding the country with cash in order to stimulate the economy. This would be a logical move; however, with its debt, Japan is very cautious at this point in time. The country really doesn't have the money to stimulate its economy. However, on March 17, The Bank of Japan agreed to double the loan program in order to "increase the liquidity in the Japanese economy". Dictionary.com defines liquidity as "available cash or the capacity to obtain it on demand". Therefore, since the liquidity is low, the loans will increase the liquidity hopefully to 20 trillion yen, which is approximately $222 billion dollars. The New York Times reports that Japan's action will allow financial institutions to borrow up to 20 trillion yen in three months with 0.1 interest rate. The New York Times also reports that the Japan officials hope to beat deflation by the end of this year.

My opinion on this matter is that they should pump this money into the monetary system. People are not spending much in a deflated economy, when prices are low, because they know that the price will only get cheaper and cheaper. In essence, the average consumer of Japan is "cheap". Even though Japan really doesn't have the funds for such an operation, it seems logical that, in the end, the "money-pumping" will pay off. That is my opinion; however, the reader's opinion may differ. The concept of the stimulus packages is a controversial issue, even in the United States. Some people think it's a good idea, because it's free money that they can spend on what they want. Other people think it's a bad idea, because they feel they will end up paying it back later. In the long term, this idea may not be such a good idea, because there will have to be somewhere where Japan gets all that money, and they will pay it back later. However, in the short term, I believe that this is absolutely necessary to beat deflation. Thank you all, and have a wonderful week.

Sources:

Tabuchi, H. (2010). As deflation fears persist, Japan eases monetary policy. The New York Times. Accessed on March 20, 2010 from NYTIMES.COM

Referenced the definition of liquidity from DICTIONARY.COM

Japanese Anime

Everyone has heard about Pokemon right? I'm sure you knew about the impact it has on Japan and other countries, including the United States. Well Pokemon is one of many anime from Japan. However, over time, the Japanese Anime Economy has been falling. The Japanese Anime Investment Group was created in 2008 in order to increase the economic factors of Japanese Anime. Lately, it's been just the same vendors and the same customers, and there is not as much economic profit. They want more people to come to conventions and invest in their profits.

With Japanese Anime, it has only been the same group who have been buying comic books in order to relieve their burning addiction/obsession. They have been given the title "Otaku". Shonen Jump, the most profitable anime company, sells millions of their copies each week to these otaku. The otaku hold anime conventions and spend their hard-earned dollars on anime, comics, DVDs, games, and action figures. Even though that this used to be a fad, it has actually started becoming an economic power in Japan, with these otaku spending $2.5 billion a year on anime. That much money could feed a small country for a long time.

This "anime-frenzy" traveled to the United States in 2000, where children were buying and trading Pokemon cards. Ten years ago, even I was doing that. My parents would give me some money, and I would buy a pack of Pokemon cards like they were solid gold. Now I know that they were just a piece of paper, but it was a wonderful memory. People do not only like anime in Japan, but it's also popular in the United States. I think this is a good way to have global unity, by sharing interests across nations.

Sources

http://www.japaneseanimeinvestmentgroup.com/
http://www.yoursdaily.com/money/japanese_anime_fans_gain_economic_power
http://news.bbc.co.uk/2/hi/uk_news/717948.stm

Cost of Living in Japan

Someone once told me the other day that I should blog about the cost of living in Japan. From researching the cost of living, I noticed that it is actually really high. It's expensive to live in Japan. There are three factors that have to be considered in the cost of living in Japan: housing, food, and transportation.

Like New York City, the housing situation in Tokyo is very expensive. Since Japan is very populated, there aren't enough housing accommodations for just everyone. Therefore, even the smallest apartments are very expensive. They can be as cheap as 39,000 yen and as high as 125,000 yen. In United States dollars, this is anywhere from $418 a month to $1339 a month, for just a small apartment. That, in my opinion, is outrageous. However, houses in the suburbs are less expensive. We rent our house in Palm Harbor and only pay $1000 a month, but it's a house, not an apartment. However, even though housing is cheaper in the suburbs, the commuting costs to work can supplement the saving.

With food, it isn't so bad if you actually eat Japanese food like vegetables and rice. If you eat at a small restaurant, you can get a full meal for 500 to 1000 yen which is a little more than $5 to a little more than $10. However, at a more average restaurant, the meal would cost anywhere from 1000 to 3000 yen, which is about $10.70 to $32. As usual, the prices would be much higher if it was at a more "nice" restaurant. With supermarkets, it is advised by "Japan Guide" to get food at night right before closing to get discounts on perishable items.

With transportation, it is really expensive to own a car. The cars themselves are inexpensive, especially with them being made close to own. However with the safety regulations, it makes it expensive. Train tickets are what most Japanese use to travel from day to day. However, usually Japanese workers invest in an unlimited travel train pass, which saves them money from buying tickets every day.

Now you know how much it costs to live in Japan, so if you are interested in Japan, or you might like to visit, you have a brief overview on how expensive.

Sources

http://www.japan-guide.com/e/e2202.html
http://www.all-about-teaching-english-in-japan.com/Tokyoapartment.html

Japan's Monetary System

Hello everyone! I hope you all had a great week! Now I'm going to catch myself up to speed and talk about Japan's Monetary System. Most of this information is taken from Japan-zone.com which offers extensive information on Japan.

Japan's monetary system is based on the yen. The yen was introduced to Japan in 1871. The term "yen" means round in Japanese. This was because the Japanese coins were round. Yen have been issued as coins and bank notes. In 1885, bank notes were issued by the Bank of Japan.



There are different types of Japanese bank notes. There is the 1,000 sen-en bank note, which is worth approximately 11.25 U.S. Dollars. The pre-2004 1,000 yen note has featured the writer, Natsume Soseki, and the post-2004 1,000 yen note features the bacteriologist, Noguchi Hideyo. There is also a 5,000 yen note, which is worth approximately 56.26 U.S. Dollars. The pre-2004 5,000 yen note has featured the Meiji/Taisho Period educatior Nitobe Inazo. The post-2004 5,000 yen note features female novelist, Higuchi Hideyo. Finally, there is the 10,000 yen note that is worth approximately 112.52 U.S. Dollars. Both the pre-2004 and the post-2004 10,000 yen note features the Meiji Period educator Fukuzawa Yukichi. Besides these 3 different types of yen notes, the Japan government issued the 2,000 yen note to spark the economy in 2000. The 2,000 yen note is worth approximately 22.50 U.S. Dollars. However, it is rare to see these notes in action. This is similar to the U.S. $2 bill. It was issued, and you can spend it; however, no one really uses it.

The thing that is fascinating about the Japanese Yen notes, is that it is similar, but different to the United States dollar. What is similar about it is the 1000 bank note is similar to the U.S. $10 bill, the 5000 note is similar to the U.S. $50 bill, and the 10000 note is similar to the U.S. $100 bill, however these Japanese notes are worth more than those bills. Also, the Japanese notes do not have the presidents on them, like the United States. The Japanese have their educators and their scientists on their bank notes, which says something about the Japanese. We have our war heroes and our presidents on ours.



The Japanese has the same amount of coins as the United States does. The United States has the penny, nickel, dime, quarter, half-dollar, and dollar coins, whereas the Japanese have the 1, 5, 10, 50, 100, and 500 yen coins. The 1 yen coin is made of aluminum, and is pictured on the far right. The 1 yen coin is worth a little bit more than 1 American penny. The 5 yen coin is made of copper, and is the fifth coin pictured. The 5 yen coin is worth almost 6 American cents. The 10 yen coin is made of bronze (the fourth on the picture above), and is worth 11 American cents. The 50, 100, and 500 yen are all made of nickel, and they are also worth more than their American counterpart. The 50 yen is worth 56 American cents, the 100 yen is worth $1.12 in United States dollars and the 500 yen is worth $5.62 U.S. dollars. These values are very interesting, because when you start comparing the U.S. Dollar to the Japanese Yen, the Yen is actually worth more. Also the Yen starts at 1 where as the USD starts at .01. That also fools people in thinking that the U.S. Dollar is worth more than the Yen.

Well, thank you for reading my post. Stay tuned for next week!

Sources:

Japan-Zone (http://www.japan-zone.com/new/money.shtml
XE:The World's Favorite Currency Site (http://xe.com)

Toyota Recall: Part Two

Last week, I talked about the Toyota recall and how it has been affecting this economy. This week I've decided to talk more about that and the opinions of what should happen after this crisis.

The Japan Times reports that some economists think that this crisis with the Toyota recall was actually a good thing, because it may drive the economy away from manufacturing and more toward services. However, in my opinion, that would be a bad idea. The United States loves to get things that are manufactured in Japan, China, and Taiwan. It would change the nation. However, Japan Times reports that Toyota's amazing reputation for good vehicles is crushed. They think that since Toyota's reputation was destroyed with recalls, what will people think of the other manufacturers?

However, The Japan Times reports that it's "not the time to junk the factories". Meaning that Japan gets its money through exports and manufacturing. Like I said, the United States is a huge consumer in Japanese manufacturing. It is reported that since 1990, Japan manufacturing has decreased from 28 to 22 percent of the gross domestic product. But, in order to switch to services, Japan just can't do it. Japan "lacks the flexibility, imagination, and openness" to switch to services. Besides, Japan's population is regressing. Their population is aging with people that don't know what they want to do in the world. If they switched out of manufacturing, they wouldn't be a world power anymore.

My opinion is that they should just keep the manufacturing. After reading this, it looks as if manufacturing is what some of these Japanese do best. Japanese culture allow the people to practice precision and control. They want everything to be perfect. That's why this whole Toyota crisis is so blown out of proportion. Manufacturing creates jobs for people that don't necessarily have a skill. They just do whatever they have to do to watch the machines going and operating them. Manufacturing will keep the money flowing and keep people with jobs.

Source: Rafferty, K. (2010). Not the time to junk the factories. The Japan Times: Online. Accessed on February 20, 2010 from http://search.japantimes.co.jp/cgi-bin/eo20100221a1.html

Toyota Recall

Foreign cars have been popular in American culture. More and more people nowadays are buying manufactured cars such as Audi, Toyota, Kia, and so much more. Recently, in Japan, Toyota has faced a recall in their Corolla model. The problem is the unintended acceleration and the braking problem with the cars. Toyota is blamed for their slow response to this problem. So 8.5 million cars are being recalled.

Source:

(2010). Toyota announces hybrid recall. The Chosen Ilbo (English Edition). Retrieved on February 14, 2010 from http://english.chosun.com.

Economists report that Toyota's massive recall crisis could lead to an overhaul in the Japanese economy. In Japan, Toyota has been one of the companies leading the Japanese automobile economy. However, due to this whole recall business, their image is pretty much shattered. In the beginning, the recall only happened in the United States where one of their cars fitted with U.S. parts was recalled, so the Japanese blamed the U.S. However, since the Prius was also recalled, that just shows that the perfect craftmenship or called "monozukuri" has been shattered. Japan is also struggling with China and Korea with their cheaper labor costs with their automobiles. It has been said that Japan should just switch back to their IT technology and software. In my opinion, Japan should just stop trying because they seem to be hitting their limits. This recall has been shattering their image, and instead of wasting all that money to revive their good image, they should surrender to the competition and focus more on different products. The other option is that they could re-do their whole manufacturing process to put some new freshness out there. It seems as if in the past decade products from Japan and China have been recalled for either defects or some other problems. I think that they should pay more attention and put some more effort in what they are making. Maybe do some more simulations. That might revive their image and increase their profits.

There is one more point I want to make on this post. Image is very important in the economy. For example, most consumers would buy a well-named respectable product like a Sony product because of the name and reliability attached, than a generic product that they know nothing about or a company that is known for problems. Image means a lot to the economy. It also relates to one of the lectures in Macroeconomics a week or so ago about coffee. What would consumers buy? Starbucks coffee or McDonald's coffee? Since Starbucks has good reliable coffee that they have been producing for many years, it would be hard for consumers to shift away from one company to the other.

Japan's Agricultural Importance

Last week, I introduced Japan and included an introduction to their agriculture. This post, I've decided to go more in depth with Japan's agriculture. Japan has a history of agricultural boom, but since that time, agriculture has been declining drastically.

The history started in the late 19th century, when agriculture was an important part of Japan. This was because 80 percent of Japan's employment came from agriculture. However, from the late 19th century to post-World War II, Country Studies reports that 80 percent fell down to 50 percent. Now, the agricultural importance has fallen so low that farmers own most of their income from non-farming activities.

Source: R. Dolan & R. Worden (1994). Japan: A Country Study. Retrieved on February 7, 2010 from

Japan's Ministry of Agriculture, Forestry, and Fisheries plays an administrative role on the agriculture, forestry, and fishing industries. Their duties include: production, consumption, rural development, and promotion. The MAFF is worried about the future of agriculture. This is because the population is no longer engaged in agriculture, because obviously it doesn't pay as well as being a doctor. The MAFF predicts that when the elderly farmers retire, there will be a drastic economic shortage. I expect this to happen with our country too. People are so dedicated to having a better life, wanting to make more money, that they go to school to be doctors and lawyers, just so they can live a comfortable life. We are going to see that there will be an increase of people for these really profitable jobs, where you will see less of farmers. Without food, the country can't survive, so every country needs farmers. So to try to fix this problem, the Ministry of Agriculture, Forestry, and Fisheries wants to promote rice farming, fruit farming, vegetable farming, and livestock farming, because the country needs these to survive.

I think that this problem of decrease in agriculture isn't going to only affect Japan, I think we need to watch this problem with other countries too. Not to meanfully incorporate politics in this blog, but perhaps what President Obama says to the students, to do your best in school, is not exactly the best thing in the world. Our society craves on the weak students, the ones that don't want to be anything more than farmers or burger-flippers. It's how our society stays at peak-efficiency. We all rely on each other, especially farmers. Sure, it's not the ideal profession in the world; however, we need them. Japan needs to fix this problem.

Stay tuned for more posts!
Source: Ministry of Agriculture, Forestry, and Fisheries (2007).

An Overview of the Japan Economy

Last post I decided to write about a current event on Japan, and their current situation on deflation. On this post, I've decided to write an overview of the Japan economy in order to get familiar with each aspect of their economy.

First of all, Japan is located in the Eastern part of Asia, where it is indeed an island surrounded by the Pacific Ocean and the Sea of Japan.

CIA Factbook reports that Japan is the second largest economy in the world, behind the United States. In Japan, the word keiretsu is referred as manufacturers, suppliers, and distributors. Keiretsu is one of the notable characteristics of the Japan's post-WWII economy. Another notable characteristic is the guarantee of lifetime employment for most of the workers. A comment I have about this is that it's somewhat different from the United States. There is no guarantee ever about lifetime employment with certain businesses. There is always the chance of getting fired, or laid off. However, due to the pressures of global economy, the guarantee of lifetime employment is no longer becoming a guarantee. There is now the sense of competition.

Japan is dependent on raw material imports and fuel imports. This makes sense because of all the Japanese cars that are made, they need fuel somehow. Also, the consumer products that are Japanese brands, they need raw materials in order to make final goods. In class, we learned that Gross Domestic Product is the value of all final goods and services produced within a country in a given time period. These final goods, such as motor vehicles, count toward their GDP.

Japan's agriculture is very interesting. The Japanese people are very self-sufficient in rice, and it's even part of their culture. However, CIA Factbook reports that Japan imports 60% of its food in a caloric basis. CIA Factbook reports that 1.6% of the Japan's GDP comes from agriculture. Therefore, they rely on importing food from other countries. Japan also is one of the largest powers in the fishing industry, and it is reported that they account for 15% of every fish caught around the world. That is a lot of fish.

I will be posting up more blogs about other aspects of Japan's economy every week. I hope you all will look forward to them.


Source:

CIA World Factbook (2010) - Accessed January 31, 2010.

For more information, visit https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

Japan Government Warns of Deflation

On January 20th, 2010, there was an article on Reuters.com about Japan's suffering economy. Throughout the whole world, times are tough as there are many people without work. Therefore, the government of Japan is warning that deflation is inevitable. Every nation is trying to improve from the world-wide recession that threatens people's lives. Japan, so far, has been lucky as they crept out of the recession during the second quarter in 2009. However, because their recovery can easily be broken, deflation and recent job losses may disrupt their recovery. Therefore, the government is in negotiations with the Bank of Japan in order to come up with an answer to conquer deflation. Because consumers' demands are decreasing for goods that are wanted due to deflation, it will definately weaken companies' profits. The people are skeptical by waiting until things go further down in price before they buy them. All in all, capital spending has been reaching an all-time low, which is bad news for the economy.

My reflection on this article is that it somewhat reminds me of the lecture about opportunity cost in Macroeconomics. The Japanese people are choosing to spend their hard-earned dollars on food instead of the latest gadgets, hoping they will come down in price. Therefore, the gadgets are the opportunity cost. However, the people should start spending their money on goods, because if they don't, it might halt the economy all together, so that people might lose jobs again. Sometimes, waiting for goods to go down in price is often a long extended wait because businesses will not lower prices unless it comes in their benefit. People should start spending their money to help out the economy recover.

Kajimoto, T. (2010). Japan govt warns of deflation, sticks to economy view. Reuters: US Edition. Retrieved on January 22, 2010 from http://reuters.com/article/idUSTKB00666920100120