logo
  Join        Login             Stock Quote

Zen And The Japanese Economy

 May 25, 2009 02:46 PM


No analysis of the global credit crisis and its aftermath can be complete without some reference to Japan. Some folks say the U.S. economy is headed for a Japan-style "Lost Decade". Others point to Japanese stocks and their failure to come anywhere close to their late 1980s bubble era highs as a stern warning that the U.S. market may never recover its previous highs. Both are wrong.

It's safe to ignore these theories or any others that hinge on comparisons to Japan. Why? Because Japan is different. Why is it different? Because it is. If you've lived there, you know exactly what I mean. If you haven't, ask someone who has.

If this sounds confusing or Zen-like, so be it. Although Borderless Investor was founded on the belief that the world is increasingly global and that investors need to spend more time exploring international investing, Japan still belongs in its own separate bucket for analytical purposes.

[Related -Integrated Device Technology Inc. (IDTI) Q1 Earnings Preview: Another Beat and Pop?]

When you make comparisons to Japan, it's never really apples-to-apples. It might not even be apples-to-oranges. In a lot of cases, it's more like comparing apples to, say, antique furniture.

Part of the reason is that you need to unpack the economic rationale of why something is happening in Japan and separate it from all the other political and social stuff that drives decision-making. This is not easy to do. And the "soft" political/social part of the analysis can be WAY more important than the "hard" numbers.

My former colleague Willie Pesek at Bloomberg Tokyo uses a great baseball metaphor in his latest column to drive home how Japan just does things very differently than the rest of the world.

[Related -Herbalife Ltd. (NYSE:HLF) Q2 Earnings Preview: The Potential To Shock?]

It's a microcosm of the difficulty Japan is having revamping its recession-prone economy. It shrank at a record 15.2 percent annual pace last quarter as exports collapsed and consumers and businesses cut spending.

The global recession gets most of the blame. The forces of old Japan, both in the government and private sectors, also explain why the economy isn't holding up better.

Banks, for example, avoided the toxic debt that infected peers in the U.S. and Europe. That didn't stop them from loading up on stocks via cross-shareholdings in friendly companies. The prevalence of takeover defenses and poison pills also is limiting foreign investment at a time when Japan needs it.

Japanese baseball can seem overly formulaic and rule-bound to foreigners. Then again, so can Japanese business. It's often more about bunting than swinging away.

iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageThe Boeing Company (BA) Q2 Earnings Preview: Durable Earnings Beater

The Boeing Company (NYSE:BA) will publish its second-quarter financial results before the open of the read on...

article imageAngie's List Inc. (ANGI) Q2 Earnings Preview: Trending Towards a Smaller Loss than Expected

Angie's List Inc. (NASDAQ:ANGI) will post its second quarter 2014 financial results will be released on read on...

article imageMicrosoft Corporation (MSFT) Q4 Earnings Preview: Xbox and Surface Margins the Key

Microsoft Corporation (NASDAQ:MSFT) will publish fiscal year 2014 fourth-quarter financial results after read on...

article imageBaidu Inc. (BIDU): Climbing Towards Morgan Stanley’s $239.30 Target

Baidu Inc. (ADR)(NASDAQ:BIDU) is up handsomely today, mostly thanks to an upgrade from Morgan Stanley. read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.