17-05-2003 22:16									#31
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One interesting idea would be to place a tax on holding money. High shoeleather costs admittedly but a way to regain monetary power.

	17-05-2003 22:24									#32
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quote: Originally posted by Boddington's One interesting idea would be to place a tax on holding money. High shoeleather costs admittedly but a way to regain monetary power.

How would you do that? How would you prevent capital flight?

	17-05-2003 22:26									#33
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quote: Originally posted by DanS Sony's profits are pathetic. Might as well stick your money in your mattress.

Sony is having an identity crisis. Lots of new initiatives but no real cohesiveness.

Sony is the number one rated brand in the world by the way.

	17-05-2003 22:39									#34
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quote: Originally posted by DanS That doesn't seem right. Could you recheck your numbers?

That's very right. I can't help it the your information source fails to mention Q-Q growth rates were much higher in the previous quarters.

quote: $820 billion loss in the quarter ending March this year.

820$ BILLION?!

(besides, I read somewhere MS's X-Box is making losses - couldn't find any figures though, have you seen any?)

quote: Because the overseas competition in manufacturing is particularly fierce nowadays.

So? That doesn't imply an economy is backward and there are a lot of service sectors that also know fierce international competition.
In the end it's all about added value and it doesn't really matter whether that's in services or manufacturing.

quote: Re Honda and Canon, yes they seem to make respectable profits. But there are so many companies that make hardly any profit at all.

True, but still, there are others beside Toyota.

	17-05-2003 22:58									#35
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quote: Originally posted by Colon So? That doesn't imply an economy is backward and there are a lot of service sectors that also know fierce international competition. In the end it's all about added value and it doesn't really matter whether that's in services or manufacturing.

They could find new less competitive manufacturing industries to get into, but they would end up in the same place. Only growth in service industries will be a permanent solution.

	17-05-2003 23:16									#36
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quote: Originally posted by Kidicious They could find new less competitive manufacturing industries to get into, but they would end up in the same place. Only growth in service industries will be a permanent solution.

To me, saying Japan is backward because its share of manufacturing is much higher than that of the US, is like saying Mexico should grow the size of its public expenditures to that of the US as a share of GDP: it's an error in logic.
While it's true that the larger share of the service sector is a feature of US' economy, that doesn't imply it's richer because of that. (just as the larger size of public sector compared to Mexico doesn't imply Mexico is poorer because of that)
Don't misunderstand me here, I'm not saying Japan should stick to steel or cars, I just disagree with the logic. Japan should just seek whatever that brings the highest added value.

	17-05-2003 23:21									#37
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quote: Originally posted by Colon 820$ BILLION?!

Touche.

quote: So? That doesn't imply an economy is backward and there are a lot of service sectors that also know fierce international competition. In the end it's all about added value and it doesn't really matter whether that's in services or manufacturing.

When did I say that Japan's economy is backward? Only that manufacturing is experiencing deflation more than the service sector.

quote: True, but still, there are others beside Toyota.

OK, OK.

	17-05-2003 23:22									#38
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Error during translation.

	17-05-2003 23:22									#39
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To me, saying Japan is backward because its share of manufacturing is much higher than that of the US

Again, who said this? Your pet strawman?

Tuo: $820 trillion?

	17-05-2003 23:23									#40
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This gotta be a typo. That's a sizeable chunk of Japan's GDP.

	17-05-2003 23:27									#41
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Whoops, mixed up American English with English.

US$ 820 000 000 000 is still a huge chunk of money, even when considering that company such as Sony has gigantic revenues, as well.


It seems that I should study present economics a bit more...

	17-05-2003 23:28									#42
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Colon: Could you fix your link? I am interested in where you get this.

Tuo: Of course, it is 820 000 000.

	17-05-2003 23:29									#43
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quote: Originally posted by Colon To me, saying Japan is backward because its share of manufacturing is much higher than that of the US, is like saying Mexico should grow the size of its public expenditures to that of the US as a share of GDP: it's an error in logic. While it's true that the larger share of the service sector is a feature of US' economy, that doesn't imply it's richer because of that. (just as the larger size of public sector compared to Mexico doesn't imply Mexico is poorer because of that) Don't misunderstand me here, I'm not saying Japan should stick to steel or cars, I just disagree with the logic. Japan should just seek whatever that brings the highest added value.

Are you looking at things from a micro point of view? Sure it's better for the individual firm to pursue higher profit, but what about the economy as a whole. In order for the Japanese economy to be grow further it will have to develope a service sector comparable to that of the US. The whole is greater than the sum of the parts.

	17-05-2003 23:37									#44
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Does this mean Japan is going to become a cheap shopping opportunity then?

Starchild: Actually, in some areas it already is. Japanese companies have a habit of charging different prices domestically and overseas. Small buyer's agent companies have sprung up for electronics, for instance. Remember to add VAT when you buy from Europe.

	18-05-2003 00:00									#45
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quote: Touche.

Hehe.

I checked Sony's results in the year ending March 2003. It doesn't seem all that bad IMHO, a net income of 963mn USD, and a cash flow from operating activities of 7.1bn USD.

It could be better, but it isn't horrible either considering the global economic downturn.

quote: When did I say that Japan's economy is backward? Only that manufacturing is experiencing deflation more than the service sector.

Oh ok, now I get your point. That's true, but that implies Japan's deflation is "positive", it's caused by a more competitive environment and technological change, thus only transitional. (such bouts of deflation occured frequently during the industrial revolution)

I noticed the link I had put in my previous post doesn't work so here's the link to the site of the statistical office: www.stat.go.jp/english/index.htm (go to "Economic and Financial Data for Japan", then "National Accounts (Gross Domestic Expenditure (GDE))" and then "The 1st Preliminary Estimates of National Expenditure Jan.-Mar. 2003" and finally "Development of Real GDP(Quarterly)" )

BTW, I haven't informed you anymore about my planned visit to New York: it's possible I'll be going there in June. (April proved to be premature )

	18-05-2003 00:06									#46
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quote: Originally posted by Colon Oh ok, now I get your point. That's true, but that implies Japan's deflation is "positive", it's caused by a more competitive environment and technological change, thus only transitional. (such bouts of deflation occured frequently during the industrial revolution)

And the result has always been service sector growth where there has been overall growth. Japan was an exception for awhile because they didn't have competition, but those days are over, and I don't see them coming back.

	18-05-2003 00:08									#47
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The BBC reports that the US rate of inflation, excluding volitile food and energy, was 1.5%. The lowest rate since 1966 but still not the deflation some people were worried about.

	18-05-2003 00:15									#48
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quote: Originally posted by Kidicious Are you looking at things from a micro point of view? Sure it's better for the individual firm to pursue higher profit, but what about the economy as a whole. In order for the Japanese economy to be grow further it will have to develope a service sector comparable to that of the US. The whole is greater than the sum of the parts.

I don't get your point. GDP is the total of all created added value, are you saying that once an economy reaches a "right" ratio of services/GDP some sort of hidden added value is unlocked?

	18-05-2003 00:18									#49
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quote: Originally posted by Oerdin The BBC reports that the US rate of inflation, excluding volitile food and energy, was 1.5%. The lowest rate since 1966 but still not the deflation some people were worried about.

We're in a period of disinflation right now. That means that deflation is a real danger though. The Fed wants to target the inflation rate at about 3%, so the inaction is something to worry about. They may expect the inflation rate to return to normal on its own if the economy picks up. If the economy doesn't pick up then deflation is a very real possibility. The consumer sentiment numbers look good though. Cross your fingers.

	18-05-2003 00:19									#50
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Risks of deflation, risks..especially when monetary policy is near ineffective.

	18-05-2003 00:23									#51
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quote: Originally posted by Colon I don't get your point. GDP is the total of all created added value, are you saying that once an economy reaches a "right" ratio of services/GDP some sort of hidden added value is unlocked?

I'm saying that even if Japanese companies could get into higher profit manufacturing industries in the short run that in the long run they will have to have growth in their service sector for their economy to grow. Service is where the growth is. There is a glut in manufacturing. True that you can make good profit at the high end, but that profit will decrease in the future because other countries are bound to follow that path.

	18-05-2003 00:25									#52
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It doesn't seem all that bad IMHO, a net income of 963mn USD

On turnover of $63 billion? Hmmm... I guess we have different expectations.

That's true, but that implies Japan's deflation is "positive", it's caused by a more competitive environment and technological change, thus only transitional. (such bouts of deflation occured frequently during the industrial revolution)

Good point. That is implied in my position. I guess if that were Japan's only "problem", then you could look at it as good. But Japan has a lot of problems that hang on deflation, like real estate with values unrelated to reality, bad loans, etc.

I guess you could argue that Japan just needs to hang in there through the transitionary period (that appears to be the Japanese position). But the period seems like a longer process to me. They're markets are being cannabalized by the Chinese now, but the Indians are going to be going through the Chinese process soon too.

	18-05-2003 00:26									#53
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quote: Originally posted by Boddington's Risks of deflation, risks..especially when monetary policy is near ineffective.

We don't know if it is ineffective in the US yet. Just because it may be ineffective in Japan doesn't mean the same for the US. Monetary policy is generally more effective in the US than it is in the rest of the world.

	18-05-2003 01:46									#54
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quote: Originally posted by DanS On turnover of $63 billion? Hmmm... I guess we have different expectations.

I did say considering the economic situation, otherwise it probably would have been better. And its competitors have been doing worse. For instance, Philips made a loss of 3bn € last year and it's cash flow from operating activities was only 2.2bn €.

Any American companies in consumer electronics you can compare to Sony? (and as I already said, MS seems to be making a loss with consoles, whereas Sony isn't - that wasn't just a jibe you know )

quote: Good point. That is implied in my position. I guess if that were Japan's only "problem", then you could look at it as good. But Japan has a lot of problems that hang on deflation, like real estate with values unrelated to reality, bad loans, etc. I guess you could argue that Japan just needs to hang in there through the transitionary period (that appears to be the Japanese position). But the period seems like a longer process to me. They're markets are being cannabalized by the Chinese now, but the Indians are going to be going through the Chinese process soon too.

Actually, I don't think foreign competition on its own has a lot to do with it, there's just a whole a lot of oversupply floating in the economy because 'zombie' corporations are kept alive, which is turn is linked to the institutional gridlock centered around the LDP.

Besides, the Indians are in other businesses, software, pharma, call-centers, backoffice services... the kind of stuff the US is so good at.

	18-05-2003 02:00									#55
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for instance Philips made a loss of 3bn € last year and it's cash flow from operating activities was only 2.2bn €.

Well, yeh. But Philips was making silly amounts of money only a couple of years ago--a money mint. Has Sony ever made silly amounts of money? Certainly not in the last five years -- the highest net after taxes being $1.7 billion.

Any American companies in consumer electronics you can compare to Sony?

General Electric.

there's just a whole a lot of oversupply floating in the economy because 'zombie' corporations are kept alive, which is turn is caused by the institutional gridlock centered around the LDP

There is that. True. You could make the argument that the manufacturing weakness just exacerbates the problem. Some of their economy just makes me shake my head. Like the extremely large construction industry, as I have mentioned before.

Besides, the Indians are in other businesses, software, pharma, call-centers, backoffice services... the kind of stuff the US is so good at.

The Indians are good at a lot of things. I'm more bullish on India than on China long-term. And yes, I agree that they represent a big challenge to the US in a way that others don't.

Last edited by DanS on 18-05-2003 at 02:08

	18-05-2003 03:08									#56
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quote: Originally posted by DanS Well, yeh. But Philips was making silly amounts of money only a couple of years ago--a money mint. Has Sony ever made silly amounts of money? Certainly not in the last five years -- the highest net after taxes being $1.7 billion.

www.investor.philips.com/reports/02...Report_AR02.pdf

Only a third of Philip's sales is in consumer electronics (the rest of it consisting of lighting, semiconductors, components, medical equipment etc) and it's operating profits was only 230mn € on sales of 9.6bn €.
Their consumer electronics division has been problematic for quite some time.

BTW, somewhere in the 90's, they also launched a console that was an utter failure, so as far that goes, they failed the test.

quote: General Electric.

Their consumer product division had revenues of 8.5bn $ and profits of 500m $ in 2002. That's not fabulous either, considering their home market has been a heaven of consumerism.

quote: There is that. True. You could make the argument that the manufacturing weakness just exacerbates the problem. Some of their economy just makes me shake my head. Like the extremely large construction industry, as I have mentioned before.

I think it just exacerbates the problem, normally speaking they should be able to deal with it, like the US and Europe were able to do so.
The catastrophe that the construction sector is, is directly linked to the LDP IMO.

quote: The Indians are good at a lot of things. I'm more bullish on India than on China long-term. And yes, I agree that they represent a big challenge to the US in a way that others don't.

I agree with you. China is taking a traditional route through manufacturing, India is just skipping a whole phase.

	19-05-2003 22:56									#57
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In the latest news the IMF has published a report where it claims Germany, hong Kong, and Taiwan are all are "High Risk" to entering a deflationary spiral. Supposedly, Germany is worst off since it suffers from policy constraints which prevent defict spending and its companies are burdened by combersume regulations.

Here is the BBC article on the subject. BTW Japan doesn't look like it will be reversing its deflation any time soon.

	19-05-2003 23:05									#58
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Also, Japan just nationalized its #4 bank, Resona.

http://news.ft.com/servlet/ContentS...p=1012571727313

Colon: Re Philips, you should include much of the semiconductors business in its consumer electronics division.

Re GE, yeh it's sort of a weak comparison, but it's the best I could do! American companies know better than to get into money-losing businesses!

	19-05-2003 23:35									#59
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BTW, the IMF gave the US, the UK, China, and the rest of the eurozone the all clear. So no worries about deflation in those markets according to them.

	19-05-2003 23:45									#60
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Here's a radical thought. The Japanese economy is fine. Sures there's no GDP growth, but unemployment is only 5.5%. It's not like the problems the US economy went through in the 30s and 70s.

I was in Tokyo in Japan last week. Things look better there compared to a lot of Western economies that I;ve seen recently.

Maybe we put too much emphasis on economic growth.

I mean who is doing better? The US with its great GDP growth in the 90s, but stagnant wages for the majority and extensive poverty levels or the Japanese who don't have any slums and have a high level of education?