Congrats to you on when you got out. I never thought the Nikkei should have got as high as it did the past few years.

Small time investors know that the only money in stocks in Japan are the elite (you said they were emasculated, but they know their insider deals) who get to buy, for example, Japan Post when that thing lists.

Japan’s industrial migration to Asia has certainly helped the quality of goods sold in the US.
And companies like Uniqlo have got the Chinese-made stuff up to the quality of Japan-made.

I see Apple as a two-trick and a half pony (Imac, Ipod, Iphone). With not much to follow up with right now.

As for Sony, what sort of outside advice did it get? Sell your insurance division–because it makes you look like GE? I would bet they are glad they held on to it–it actually makes money.

Interesting that Japan is open to “dumb money” from oil funds. Same reason there is talk of using the MoF’s foreigh exchange reserves to create a Japanese “sovereign wealth fund” who’s principal goal is to support local stock markets. Someone needs to tell policymakers that (a) the purpose of foreign exchange reserves is that they should be in foreign currency - otherwise you create another bubble, (b) yet again they are ready to use tax payer’s money to bail out failing companies for political reasons, and (c) sovrereign wealth funds are meant to diversify overseas not double up on the local economy.

I agree about the “gaiji taleento” absolutely. The fact that they were viewed as gods in Japanese corporate circles but revealed feet of clay in the big bad outside world merely highlights how low the talent bar is in Japan. You could take a 3rd rate gaijin exec and drop him into a Japanese co. and the results would be equally good. This is Japan’s achilles heel: great craftsmen and engineers, but not enough good managers and leaders able to play the global game.

Such a pity that Macarthur emasculated the country by removing the ruling elite. Every since then, its been rule by descendants of the peasant class who lack the social authority to achieve change but are able to resist any effort at resurgence by the old elites. Look at how the LDP reacts everytime the scion of an old family attempts to gain power.

Let’s not get too excited about the DVD story folks. Squeezed between Apple and Samsung, Sony still looks like a sitting duck with too many unprofitable product divisions.

Oh, and since you asked Charles: having been patient elephant hunters throughout the 1990s we bought the TOPIX at 7900 and got out at 1720 when it became clear that (i) the Chinese were not buying Japanese goods as much as the world thought they would, hence the Hang Seng would break through 18,000 but the Nikkei would languish below that ceiling (ii) the Koreans were the new masters of innovation and content in Asia while Apple was rewriting the playbook globally and (iii) Japanese mom-and-pop investors were more eager to buy Australian kangaroo bonds and euro deposits than supposedly “high-quality, long-term blue-chips” listed on the Nikkei.

We also get mineral water from UAE. Nothing like that oasis water in a PET bottle that is produced more cheaply than it would be in Japan (the bottle, not the water).

All to appease the American masters, which nationalist conservative governments in Japan have always done–if they can sell it in the name of reform, all the better apparently for them.

Japan is seeking tie-ups with ME countries for one reason only: OIL. It would not matter how these countries manage their surpluses and invest in countries like Japan, private equity, government equity, sovereign funds etc.

I’m not really sure what you are talking about Astro, but you sound like a guy who made a bet that the Nikkei would get to 20 thousand before you sold your stake.

Sony hired Howard to win the DVD standards war. They won!

It’s true American business culture (exported worldwide through those awful MBA programmes) doesn’t mesh with Japan’s.

My advice to all those American business majors lost in Japan: shed those Brooks Bros suits!
They make you look like an American.

I don’t dispute the anecdotal cases of success, but this is possibly sample bias because as a percentage of total investment (and compared to any meaningful peer) Japan’s net FDI take is negligible. And it’s not all because they don’t need the money. Intra-industry investment is pretty low because of corporate governance (i.e. employment policy) issues.

Well, we’ve been waiting for nasty Anglo-American capitalism to unwind for a long time but the damn thing just keeps mutating. I don’t dispute your view that Japan’s capitalism is in a subordinate position however - it’s been that way since 1945 - but I’m afraid its already unwound itself during the deflation and hasn’t managed to find its way back yet.

What’s missing in Japan now is an economic purpose, a narrative, that motivates people. The country feels trapped in a 1980s time-warp.

Their political economy doesn’t need a bunch of short-term investing from overseas. It’s self-sufficient. So long as the government can keep selling all those bonds to domestic investors anyway.

Foreign interests have huge investments in Japan. Whether it is Coca Cola or P&G or all those private equity groups who got paid to take over banks–or Prudential helping Kyoei Seimei to run itself into the ground and then getting to take it over. Ford probably makes more money off of Mazda than any of its North American manufacturers. Etc etc.

The US is going to come unwound in a big big way. Not Japan. Or if Japan does, it will because good ole American capitalism and hegemony did it in.

Its called seignorage and like droit de seignur is something Japan is compelled to accept - at least since 1945 - because they were unable to successfully internationalise their economy (open up to perfidious foreigners and allow them to become addicted to yen) in the 1990s. Remember the “Miyazawa plan” for a yen-zone in Asia? Dead duck. Until there is an Asian euro - or at least a RMB bloc - the greenback looks pretty secure (even the euro at these levels cannot remove its role as the world’s reserve currency).

Ergo, the debt Japan holds is frankly of zero value in terms of exerting leverage or being liquidated. In fact, most of what the BoJ holds are classified by the US Treasury as “non-marketable securities” which are units of credit for the G7 central banks. What does this mean? Remember the old joke about bankers: “if I borrow $10,000 from you and cannot repay I have a problem. If I borrow $10 million from you and cannot repay then YOU have a problem”….

As for the point about shareholder value. Yes, its true that the MS bid for Yahoo is for strategic reasons (technology control and market share) but those are simply stepping stones to ultimate profitability. That is something Japanese kaisha never manage to achieve. They are always stuck on the stone, never able to step up to profits.

Moreover, in the stock market the ability of one firm to buy another in an uncouth hostile manner maximises the combined value of both entities - not always true of course, the world is littered with failed mergers driven by vanity and fashions - so that investors (i.e. your and my pension funds and insurance policies) holding a broad portfolio of shares achieve sustained returns. That is the point. For the greater good, companies must evolve or be eaten and reconstituted. This is the main failing of Japan’s compartmentalised capitalism where one part of the bento box is always reserved for a particular filling.

I remain open to being positively surprised. And of course Japan’s cultural choices are as valid as any other market societies. But its been a long time since the bubble burst and still no phoenix. With the demographic challenge now undeniable its hard to see anything more than gradual fading away.