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Drawing the Parallels between China & Japan
Topic Started: 4 Sep 2015, 07:20 PM (2,666 Views)
Terry
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stubby
5 Sep 2015, 02:21 PM
Meh, look at how far Japanese-brand cars have come in 50 years, or Korean-brand cars have come in 20. There's no real impediment to China doing the same.

Meanwhile, we're already buying services from the newer bits of the Chinese economy. My primary employer has an 9-figure IT consolidation project underway, led by Germans, but with most of the code written in China. Considering the global reach of the German integrator, I doubt it's the only such project.
Yes, there are "real" impediments. Capital intensive equipment, know-how, and IP used in China usually comes from elsewhere, including Japan and Korea. As for "parts", what is being produced in China can be produced in Thailand and Vietnam. If this was of interest to you, it is happening on a large scale right now.
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Loki
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Terry
5 Sep 2015, 12:00 PM
I think you probably need to focus on the points that Tett raises, but I do agree with the points you make. Whether or not that means China will avoid what happened in Japan is still not really thought about. Of course, there is no reason why that necessarily has to happen.
While it is true that China developed their own version of the Manchuko Economic Model, in reality it is so different from Japan that I don't know how helpful the Japanese experience is for making predictions about China.

China is, and always has been, a very difficult country to unify. Most governments in Chinese history that have succeeded at unification have been brutal, ruthless dictatorships, that fracture at the first sign of weakness, sending the country into chaos. I think that outcome is more likely, even in the 21st century, than two lost decades of buckle-down moping.

I think China will be lucky to even get the same outcome as Japan. Avoiding even some "lost decades" (where the population becomes wealthier and lives longer) would take a small miracle.

When the Japanese stock market imploded, Japan was one of the most, if not THE most technologically advanced country on earth, not some vast sprawling dictatorship with 600 million peasants. The Japanese went from high value industry to even higher value industry during the lost decades to become one of the largest manufacturers of producer goods.

I think China has a bright future in 2030, but the next decade is going to be very difficult.


“Talk sense to a fool and he calls you foolish.” - Euripides
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GuestSpeaker
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stubby
5 Sep 2015, 02:21 PM
Meh, look at how far Japanese-brand cars have come in 50 years, or Korean-brand cars have come in 20. There's no real impediment to China doing the same.

Meanwhile, we're already buying services from the newer bits of the Chinese economy. My primary employer has an 9-figure IT consolidation project underway, led by Germans, but with most of the code written in China. Considering the global reach of the German integrator, I doubt it's the only such project.
I don't follow this logic. Just because Japan and to a lesser extent Korea have gone from making crap to high quality stuff - ipso facto - China will do the same?

China has now been in the manufacturing game in a big way for 15 years. They started off making poor quality stuff, and for a large part they still do (with the odd exception).

Anyone who has spent meaningful time in both countries will have noticed how different the two cultures are. The Japanese culture is ingrained with the striving for perfectionism, ability to cooperate, and relatively small amounts of corruption.
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createdby
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Nikkei will be the last Keynesian domino to fall, being the most insane instigator of QE madness (their CB buys stocks directly unlike other CB's).

But contrary to popular belief, even Keynesians can run out of Ammo.

Could be the black swan event out of all the 100 black swans flying around.



http://www.bloomberg.com/news/articles/2015-09-10/boj-s-kitty-running-dry-leaves-etf-watchers-guessing-next-move



Bank of Japan's Declining ETF Funds Leave Investors Guessing Next Move
Toshiro Hasegawa Anna Kitanaka
September 11, 2015 — 9:45 AM AEST



Bank sped up purchases during rout in Japan stocks last month
Annual budget set to be increased, strategist Arai predicts

On Sept. 8, as the stock market slumped, investors were surprised to find the Bank of Japan, normally a buyer of exchange-traded funds on the Tokyo bourse, absent.

What happened? The central bank, which is authorized to purchase about 3 trillion yen ($25 billion) in equity ETFs a year, is running out of ammunition, having spent 78 percent of its total as of Sept. 7. Because the BOJ usually buys on days the market falls, it sped up amid a rout in the Topix index.

Now it must slow down for the rest of 2015 or increase its allotment, according to Mitsubishi UFJ Morgan Stanley Securities Co.

“They’ve only got a little bit left in their quota,” said Seiji Arai, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “I think they’ll vow to increase yearly purchases by 1 or 2 trillion yen in October.”
The Topix dropped 2 percent on Sept. 8 to close at its lowest level since February, extending August’s 7.4 percent decline. The central bank usually buys Japanese stocks when the benchmark gauge declines in the morning session. Last month, the central bank bought even on mornings the Topix slipped as little as 0.3 percent. The measure lost 0.4 percent before lunch on Sept. 8.
Smaller Purchases

The BOJ purchases ETFs as a way to spur more trading and promote more risk-taking activity, it says. The central bank had bought 2.33 trillion yen in ETFs this year as of Sept. 7. With just 670 billion yen to go until its limit, the central bank has shrunk the amount it buys each time by 15 percent from its first purchase of the year to 31.7 billion yen in September. It stuck to that amount with a purchase on Thursday.

More than a third of economists see the BOJ adding to easing by the end of next month, according to a Bloomberg News survey this week. The Oct. 30 meeting -- when the central bank releases updated projections -- would be a "good opportunity" to boost stimulus, says ruling party lawmaker Kozo Yamamoto.
Equity markets around the world tumbled in August, destroying $5.8 trillion in value, as China weakened the yuan and investors bet the Federal Reserve was moving closer to raising interest rates. As the Topix recorded its worst monthly loss since 2012, the central bank purchased 302 billion yen in ETFs. Without that, the rout would have been much worse, according to Arai.

“The BOJ had a big role in supporting the market,” he said. “If they don’t increase purchases now, it’s going to be a shock.”


Takeshi Fujimaki:

* Japan may default this year

* 400 yen to the dollar


Like China, the cracks start to appear when plunge protection give up a day or two of soaking up equities, the markets get spooked, percentage drops cascade over a few weeks, and the drainage becomes too big for the PPT.

It has already happened in the last month or two with the Nikkei. Their equity buying spree will be closely looked at in the next few weeks, but some Japanese like Takeshi Fujimaki see the writing on the wall.


Edited by createdby, 12 Sep 2015, 09:40 PM.
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Terry
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createdby
12 Sep 2015, 09:17 PM
Nikkei will be the last Keynesian domino to fall, being the most insane instigator of QE madness (their CB buys stocks directly unlike other CB's).

But contrary to popular belief, even Keynesians can run out of Ammo.

Could be the black swan event out of all the 100 black swans flying around.



http://www.bloomberg.com/news/articles/2015-09-10/boj-s-kitty-running-dry-leaves-etf-watchers-guessing-next-move



Bank of Japan's Declining ETF Funds Leave Investors Guessing Next Move
Toshiro Hasegawa Anna Kitanaka
September 11, 2015 — 9:45 AM AEST



Bank sped up purchases during rout in Japan stocks last month
Annual budget set to be increased, strategist Arai predicts

On Sept. 8, as the stock market slumped, investors were surprised to find the Bank of Japan, normally a buyer of exchange-traded funds on the Tokyo bourse, absent.

What happened? The central bank, which is authorized to purchase about 3 trillion yen ($25 billion) in equity ETFs a year, is running out of ammunition, having spent 78 percent of its total as of Sept. 7. Because the BOJ usually buys on days the market falls, it sped up amid a rout in the Topix index.

Now it must slow down for the rest of 2015 or increase its allotment, according to Mitsubishi UFJ Morgan Stanley Securities Co.

“They’ve only got a little bit left in their quota,” said Seiji Arai, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “I think they’ll vow to increase yearly purchases by 1 or 2 trillion yen in October.”
The Topix dropped 2 percent on Sept. 8 to close at its lowest level since February, extending August’s 7.4 percent decline. The central bank usually buys Japanese stocks when the benchmark gauge declines in the morning session. Last month, the central bank bought even on mornings the Topix slipped as little as 0.3 percent. The measure lost 0.4 percent before lunch on Sept. 8.
Smaller Purchases

The BOJ purchases ETFs as a way to spur more trading and promote more risk-taking activity, it says. The central bank had bought 2.33 trillion yen in ETFs this year as of Sept. 7. With just 670 billion yen to go until its limit, the central bank has shrunk the amount it buys each time by 15 percent from its first purchase of the year to 31.7 billion yen in September. It stuck to that amount with a purchase on Thursday.

More than a third of economists see the BOJ adding to easing by the end of next month, according to a Bloomberg News survey this week. The Oct. 30 meeting -- when the central bank releases updated projections -- would be a "good opportunity" to boost stimulus, says ruling party lawmaker Kozo Yamamoto.
Equity markets around the world tumbled in August, destroying $5.8 trillion in value, as China weakened the yuan and investors bet the Federal Reserve was moving closer to raising interest rates. As the Topix recorded its worst monthly loss since 2012, the central bank purchased 302 billion yen in ETFs. Without that, the rout would have been much worse, according to Arai.

“The BOJ had a big role in supporting the market,” he said. “If they don’t increase purchases now, it’s going to be a shock.”


Takeshi Fujimaki:

* Japan may default this year

* 400 yen to the dollar


Like China, the cracks start to appear when plunge protection give up a day or two of soaking up equities, the markets get spooked, percentage drops cascade over a few weeks, and the drainage becomes too big for the PPT.

It has already happened in the last month or two with the Nikkei. Their equity buying spree will be closely looked at in the next few weeks, but some Japanese like Takeshi Fujimaki see the writing on the wall.


Well 400 yen to the dollar was a pretty radical call. But yes, I would steer well clear of the Nikkei for now. The smart money got out 2-3 months ago.
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createdby
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BoJ sucked every last bit of liquidity in the market. No more JGF's to keep QE going. Running out of bonds to buy, they'll be tapering for sure

http://www.bloomberg.com/news/articles/2015-09-01/new-whale-seen-moving-tokyo-markets-as-japan-post-sells-bonds


They just finished vacuuming bonds from GPIF (world's largest sovereign fund).


Speaking of which, the strategy of Government Pension Insurance Fund to shift from bonds to stocks first quarter this year, just shows the stupidity of the bureaucrats handling the pension of peoples around the world. They certainly bought high and will be selling low in the future:

http://www.institutionalinvestor.com/article/3447097/investors-pensions/big-asset-shift-of-japans-gpif-is-secret-weapon-of-abenomics.html#.VfQMVxGeDRY


We all know indices around the world started to tank last March/April.


Chinese pensioners just joined Japanese pensioners in getting fucked in the left and right eye out of their pension:

http://www.reuters.com/article/2015/08/28/us-china-economy-pensions-idUSKCN0QX0DH20150828


Aussie boomers will follow soon.






Edited by createdby, 12 Sep 2015, 10:36 PM.
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