Terrie's Take 843 -- How the Failure of Abenomics Leads to the Record Sales of Safes

Terrie's Take terrie at mailman.japaninc.com
Mon Mar 21 11:01:49 JST 2016

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term 
technology and media entrepreneur living in Japan. 

General Edition Sunday, March 20, 2016, Issue No. 843

- What's New -- How the Failure of Abenomics Leads to the Record Sales 
of Safes
- News -- Can Sharp trust Honhai?
- Upcoming Events
- Corrections/Feedback -- Marcus Yip Passes Away
- Travel Picks -- Pancake Rocks in Wakayama, Railway Museum in Kyoto
- News Credits

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After a strong start last year, the ruling LDP government seemed 
genuinely perplexed when at the end of the year the nation's annual Real 
GDP was found to be just 0.5% and for the last quarter a problematic 
-0.3%. The government's leadership continue have their collective heads 
buried in the sand by blaming an unusually warm winter and other 
external factors for the anemic performance. You kind of feel sorry for 
them. After all, they have done everything by the textbook (well, the 
Keynesian textbook, anyway), by expanding the nation's money supply 
aggressively, and by implementing various stimulus packages.

But unfortunately Mr. Abe's crew seem to have forgotten one small thing, 
they need the public to respond to their pump-priming (the whole point 
of Keynesian policies), and this means being seen to be making real 
regulatory reforms for the future, not just recirculating cash among 
vested interests. Abe needs to make good on his promised third arrow - 
slashing business regulations and encouraging innovation, liberalizing 
the labor market, getting tough with the agricultural sector, cutting 
corporate taxes, and increasing workforce diversity through immigration 
and improved support of working mothers.

But instead the reverse is happening. For example, if you look at the 
2015 statistics for Japan, the allocation of funds for 
development/promotion of Small and Medium-sized Enterprises (SMEs), the 
drivers of employment and economic growth in any country, fell from 
JPY825bn in 2012 to just JPY186bn last year. At the same time, the 
government spent JPY1.042trn (six times as much) on "stable food 
supply", a code for rice farmer subsidies. In other words, it's business 
for the vested interests as usual.

And now with the Bank of Japan moving to impose negative interest rates 
on retail banks so as to force them to start investing their cash 
instead of parking it, we can all see that the Bank of Japan's policy 
makers are running out of ammunition. This means that Abe's politicians 
either need to do their share of heavy lifting by implementing reforms 
or the economy will be pretty much driven by external influences. Right 
now, those influences are driving the yen back to 100 to the US dollar, 
and will undo any of the benefits achieved over the last 3 years.

For the rest of us, this means that sectors that have been enjoying 
increased business because of the cheap yen will see a reversal of 
fortunes, including the exports, international recruiting, inbound 
tourism, and banking/investment (i.e., a slow down in the repatriation 
of overseas earnings by Japan-based parent companies). At least overseas 
trips and food imports will get cheaper, though... ;-)

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are you already running one and wondering how to move up to the next level?

Local Australian/Kiwi entrepreneur Terrie Lloyd, is running a seminar 
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2016. Terrie has established 17 companies in Japan over the last 30 
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run your business when first starting up, with particular reference to 
his latest www.japantravel.com project.

Details: http://www.japaninc.com/entrepreneur_handbook_seminar

[...Article continues]

The media is full of articles speculating as to why Abenomics is not 
working, and certainly international pressures are one cause. But we 
don't think they are the root cause. For that, you need to look at WHY 
the Japanese public and its corporations are so reluctant to take a risk 
and spend some of their hoarded cash. Our take is that the malaise is 
caused by one simple thing: a lack of trust in the government and its 

Without trust that there will be innovation and growth, the leadership 
of big companies see their current record earnings as temporary and 
don't want to share them with employees. The employees themselves hold 
off on spending, thus strangling the birthrate, car ownership, stock 
market shares, travel, and advanced education. As an end-game the public 
starts pulling cash out of the system and stashes it literally under the 
mattress or in safes at home.

This is no joke and the situation is prompting all kinds of abnormal 
(but perfectly logical) behavior by the public. For example, there has 
been a surge in cash hoardings, with an extra 6.2% ten thousand yen 
bills going into circulation last year, the highest jump in demand since 
2002. This means that there is now totally about JPY100trn (US$890bn) of 
cash in circulation, around 20% of the total economy. And to hold all 
that cash, there has also been a run on home safes, with sales soaring 
60% to 70% above last year.

It's ironic that even as consumers distrust the government, they still 
trust it to honor the bills it issues.

Well, not everyone trusts the government to honor its paper and as the 
Japanese are generally well educated there is a growing segment of the 
community that is starting to buy gold. The price of gold bars has risen 
to JPY5,027/gram and demand in 2015 was up a whopping 70%, from 17.9 
metric tons in 2014 to 32.8 tons in 2015. This makes Japan the seventh 
largest consumer of gold in Asia, even though as a nation they don't 
really have a recent gold culture like the Chinese and Indians do. At 
this rate, Japanese consumers will spend about JPY300bn in 2016 just on 

So what is the government to do with this seemingly intractable 
situation? There are really only two ways forward for Abe's government: 
either confront their personal demons and attack and reform vested 
interests while funding SMEs who are the real growth engines for the 
country, OR, devalue all that cash hidden under mattresses through more 
inflationary policies and distract the public's attention with a little 
military adventure.

And what better than a little military adventure against the Chinese 
bogeyman through a SE Asian proxy such as the Philippines?

...The information janitors/


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Your original dish could win you a cash prize! Send in your own recipe 
for either a Japanese dish or one from your own country, that uses soy 
sauce as an ingredient, for a chance to win ¥100,000! Deadline for 
applications is May 31, 2016.

Grand prize - 100,000 yen x 1 person
Silver prize - 50,000yen x 2 persons
Bronze prize - 30,000 yen x 7 persons.



+++ NEWS

- Casinos bill isn't going to happen
- Anonymous targets local government over zoos
- Passage of TPP bill a done deal?
- Can Sharp trust Honhai?
- Yahoo Japan girding up for inbound travel sales

=> Casinos bill isn't going to happen

It's been a long fight by LDP politicians and supporters to get a bill 
permitting casinos into consideration by the Diet, particularly as the 
LDP's junior coalition partner, the Buddhist Komeito, are against it. 
But with other priorities stemming from international events, the casino 
bill has missed this session of the Diet. As a result, it looks like 
casinos may be put back on the back burner for an indeterminate amount 
of time -- certainly too late to allow any facilities to be built before 
the Olympics. ***Ed: Why was the casino bill derailed? Basically casinos 
are viewed as a source of corruption by Buddhist parties, and are a 
political hot potato. With Abe reportedly considering a snap election 
next year, casinos are definitely too hot to risk losing an election 
over.** (Source: TT commentary from forbes.com, Feb 26, 2016)


=> Anonymous targets local government over zoos

A sub-group of Anonymous hackers has decided to go after Japanese public 
and private organizations that are considered to support animal cruelty. 
A  group calling itself Karmasec, hacked the Yamaguchi Prefecture 
Tourism Division website (www.visit-jy.com) in protest for alleged 
mistreatment of animals at the Akiyoshidai Safari Land, which is located 
in the prefecture. Karmasec issued a notice saying that they would 
continue their attacks unless the animals at the facility were released. 
***Ed: To where, we wonder? It is true that Japan is creating a serious 
international reputational liability through its inhuman treatment of 
animals, not just in zoos but also its infamous dolphin and whale hunts. 
The Karmasec attack could mark an "open season" on Japanese websites, 
something that Chinese hackers would be rather gleeful about. We note 
that the Yamaguchi web site is back up and running now.** (Source: TT 
commentary from hackread.com, Mar 19, 2016)


=> Passage of TPP bill a done deal?

An article in the latest issue of The Diplomat website says that passage 
of the TPP bill within Japan is a done deal, despite tough talk from the 
Norin-zoku block within the LDP. The writer says that the bill will be 
subject to some stormy debate in the Diet, but that most of verbiage is 
posturing for home-prefecture voters. Why is it a done deal? Firstly 
because the bill has already been passed by the LDP's party machinery to 
get this far already. Secondly because of the large compensatory 
payments that will flow to the affected farming communities. ***Ed: And 
if there's one thing we know - the friends of farmers love the tinkle of 
a cash waterfall.** (Source: TT commentary from thediplomat.com, Mar 19, 


=> Can Sharp trust Honhai?

Or for that matter, can Honhai trust Sharp? Seems like the pending 
JPY489bn share purchase of 70% of Sharp by the Taiwanese company may be 
in jeopardy. Honhai has apparently pulled back from an initial plan to 
buy the shares, over concern that potential liabilities at Sharp are 
much higher than the company is saying. Apparently Honhai is looking to 
reduce its purchase offer. ***Ed: Terry Gou of Honhai is a shrewd 
businessman and pulled the same stunt last time with Sharp, basically 
switching-and-baiting his offer with a lower one, in order to see how 
desperate Sharp was. He lost the game of chicken last time, and he may 
again this time. If this continues, we think the INC-J will come back 
with the support of one of the other Japanese government financial 
entities to make a renewed and more favorable offer for the shares.** 
(Source: TT commentary from reuters.com, Mar 19, 2016)


=> Yahoo Japan girding up for inbound travel sales

According to the Nikkei, recent moves by Yahoo Japan indicate that the 
company is getting ready to start inbound travel sales to foreign 
customers. The company has taken on PayPal as a payment option, and 
apparently it will help market Japan and Yahoo Japan's travel portal 
(actually, Ikyu Travel, which Yahoo has just bought) as a destination to 
buy tickets. Apparently the PayPal relationship will also be enhanced by 
Yahoo's ownership of the Dynatech hotel booking network, a company that 
Yahoo Japan also bought last year. ***Ed: Problem is, no one reads 
PayPal's commercial announcements, they're just annoying, and most 
customers divert them in the junk mail folder. Further, Ikyu has 
virtually nothing other than 500 or so ryokan to offer inbound 
foreigners. The Nikkei is so full of bull recently...** (Source: TT 
commentary from asia.nikkei.com, Mar 17, 2016)


NOTE: Broken links
Some online news sources remove their articles after just a few days of 
posting them, thus breaking our links -- we apologize for the inconvenience.



--------- [NEW!] Wildcard Incubator Program ---------------

KOEI COMPANY Inc. Presents its latest "Up Close" Tokyo Session 2016 seminar

KOEI COMPANY is a San Francisco based consulting/M&A practice, and the 
co-founder of the Wildcard Incubation Program. We will be hosting our 
latest seminar session in Tokyo for startups, entrepreneurs, and other 
internationally-minded business people, focusing on the Inbound business 
in Japan and how to launch a new businesses.

Main Speaker: Terrie Lloyd, Serial Entrepreneur, Founder/CEO Japan 
Travel K.K.
Moderator: Nobu Kumagai, Founder, KOEI COMPANY, Inc.
Title: "The Real Deal of Running an Inbound Business in Japan"

Details: Complete event details at http://upclose201604.peatix.com
Date/Time: April 12, 7-9pm, 6:30pm doors open
Venue: Connecting the Dots co-working space, Shibuya, Tokyo
Cost: 2,000 yen, please purchase tickets via Peatix Event Page: 
More information: nobu.kumagai at koei-company.com

+++ CORRECTIONS/FEEDBACK -- Marcus Yip Passes Away

=> With great sadness we inform you that Marcus passed away peacefully 
on Monday morning, March 14th. He died of a brain tumor. His funeral was 
yesterday in Koto-ku. Marcus will be remembered, in the words of his 
friend Skip, for "...being an excellent and generous host whether it be 
organizing and adding his personal touch to an event with 500+ people or 
simply sitting down with you to have a chat and perhaps share a glass of 
75-year old port to make a meal a little more special."

Marcus is survived by his wife Takae and two young children Kylie and 
Hannah. A fund established some weeks ago to help Marcus and his family 
is still going, and currently is at US$50,871. Our understanding is that 
Marcus' ordeal has left the family with very little in assets, and any 
help that readers can provide would be gratefully received. See more at 
the URL below.




=> Senjojiki - A Thousand Tatami Mats, Wakayama
Explore the hidden plateau of multi-tiered rocks

Nanki, a generic name for the southwestern part of Wakayama, has an 
array of various amusement parks, zoos, beaches and places where you can 
enjoy water sports. Approximately two and a half hours away from Osaka 
by limited express train, Shirahama is a great place for a weekend trip 
not to be missed. It is known as one of Japan's biggest onsen (hot 
spring) resorts and lives up to its name for its beautiful white sand 
beaches. A popular spot in summer, the resorts are usually booked months 
in advance. An annual event in the last week of May, modeled after the 
Snow Festival in Hokkaido, the Suna (sand) Festival features a 
competition of spectacular three-dimensional artworks made from just 
sand and seawater. 40 to 60 pieces of sculptures are usually displayed 
on the beach. It is always a spectacle to behold and participate in.

But away from the crowded main streets, located in southwestern 
Shirahama, Senjojiki is an interesting tiered formation of huge 
horizontal rocks created by the constant erosion of the powerful waves 
of the Pacific Ocean over the years. The waves are extremely strong, and 
they continue to reshape the rocks year after year. It remains a natural 
marvel left untouched by human development.


=> Fukuchiyama Railway Museum, Kyoto
Fun for adults and children at Poppoland

Ask someone these days about the role of trains in rural Japan, and 
chances are they will tell you about Kami-Shirataki, Kyu-Shirataki and 
Shimo-Shirataki stations. Located one of the remotest parts of the north 
island Hokkaido, they were destined for imminent closure until they 
realized there was a schoolgirl who journeyed from the station to go to 
school during term. Followers of that story would know how much the 
railway is a lifeline to remote communities. Whether in the snow of 
Hokkaido or the mountains behind Fukuchiyama, the trains connect remote 
villages hidden in the mountains, often hamlets that would be closed to 
the rest of the world if it was not for the train.

Long before the advent of the first Tokaido Shinkansen bullet train 
service in 1964, steam locomotives such as the C58 series ferried 
passengers and freight across Japan. It was a big trip for someone to 
visit Kyoto from Hiroshima or Tokyo in the 1950's. With more than 400 of 
these 2-4-2 configured locomotives built between 1938 and 1947, they 
were the backbone of train travel until the 1960s. Today, you can get a 
feel of how magnificent these 100 tonne plus locomotives are, at the 
Fukuchiyama Railway Museum Annex (Poppo land No 2). Her sister train, 
the C58-1, can be found at the Kyoto Railway Museum from May 2016.



---------------- Ota City Photo Contest -------------------

With beaches, rivers, and parks that allow enjoyment of the outdoors, 
Ota has been described as a microcosm of Tokyo. Off the usual beaten 
track, Ota is famous not only for its traditional culture, masterful 
craftsmen, and bustling shopping streets, but also recently it became 
the first Tokyo city to allow Minpaku (Airbnb) style accommodation.

Ota-ku is now running a photo contest to help it highlight this unique 
part of Tokyo. Send in your favorite photo(s) taken from anywhere within 
Ota City or Haneda airport for a chance to win an Amazon JPY5,000 
voucher. Submit photo(s) via email to ota at japantravel.com by March 31st. 
Winning photos may be featured on the city's web site.



SUBSCRIBERS: 6,794 members as of March 20, 2016 (We purge our list 


Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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