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LIST  December 2013

LIST December 2013

Subject:

Re: Wolf says Abenomics misdiagnoses the problem.

From:

Minoru Mochizuki <[log in to unmask]>

Reply-To:

NBR's Japan Forum <[log in to unmask]>

Date:

Thu, 19 Dec 2013 11:43:48 +0900

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (53 lines)

Although I am a complete amateur when it comes to economics, I think I
understand what Mr. Arthur Alexander is saying here (see below). 

The problem, if I may call it a problem, is that there are hardly any true
investors in Japan.

Japanese firms' shareholders typically consist of other corporations, e.g.,
financial institutions and affiliated companies, plus "voiceless"
rank-and-file investors. Hence no pressure on high returns or efficient use
of capital.  

Typically, a Japanese retiree buys stocks but seeks only stocks of
well-established stable companies and they are content with medium level
(10-15% on face value of a share) on returns, not high-risk-high-returns.
Trying to increase one's asset through stock investments is still an
outlandish idea for a typical Japanese. They are content with some
preferential tickets (e.g., discount air tickets) companies provide for
their shareholders regularly and they hardly have any knowledge how the
companies make or lose money. As an example, they probably knew that Olympus
makes world-class endoscopes and that's how Olympus had been profitable but
nothing about the company's risky financial operations.  

On the contrary, the economic rules and operations prevalent in the Western
World seem to be governed too much by the voices of investors. Even the
diplomatic and defense policies of those nations are influenced too much by,
or rather, exist only for, the benefits of those investors. The defense and
diplomatic decisions of the United States concerning the relation between
China and Japan are no exceptions, I suppose.  

Minoru Mochizuki
           

-----Original Message-----
From: Alexander Arthur [mailto:[log in to unmask]] 
Sent: Wednesday, December 18, 2013 12:07 PM
To: [log in to unmask]
Subject: Re: [NBR's_Japan_Forum] Wolf says Abenomics misdiagnoses the
problem.

<skip>

Why does this happen? My hypothesis is that corporate governance does not
require high returns or efficient use of capital. Despite many real changes
over the past 15 years, I do not yet see an overall shift in corporate
behavior despite my earnest squinting at the data.

The old notion that long-horizon Japanese managers and financial
institutions were good for the economy was never true as an accurate
description or, if true, as a harbinger of a better economic future.

########################################################################

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