Japan; The Crisis That is Coming
By Mario Sanchez
Copyrights
http://www.engitek.com/
http://www.industriaytecnologia.com
We have recently been bombarded with news about the Greece and other European Countries deficit crisis, affecting the stocks all over the world. This is only the tip of the iceberg and most reflectors are ignoring a monster crisis ahead, while the Greek crisis sent bad news to the markets, it was just a child game compared to what is the monster emerging in a near future and this will come from Japan, the third largest economy in the world.
Now you know what a comparative troubled little economy like Greece can do to the world, now image what could happen if the third largest economy collapses. Japan was considered from the 60’s to the 80’s the example to follow in growth, efficiency and prosperity even was said at the peek of this bonanza that “A square yard of land in Tokyo worth more than an entire block in Manhattan” this growth bubble created a false sense of wealth and real estate value that soon exploded.
Japan now is facing crucial circumstances never before encountered that unfortunately based on the current condition and trends, won’t be easily diverted or corrected, actually all indicates that it will get badly worst before it gets any better. The problem here is that when this happens it will send gigantic economic tsunami waves all over the globe.
Let face some data and trends:
Japan is the third largest economy in the world with and estimated 4.137 trillions dollars as Gross Domestic Product in 2009 just behind the China and USA, but the government current debt is 192.1% of this GDP, this means that the government debt is almost twice as the value of all products and services generated in one year in Japan!, and more likely will increase sharply in the coming years if the current trend continue.
Lets put just few data to show this scary trend, in order to keep this article short only data from 2009 will be shown:
Source CIA World Factbook and IMF
(Monetary Information in US Trillions Dollars)
Year: 2009
GDP: $4.368 Triilions
Public Debt: 192.1%
Unemployment Rate: 5.6%
Government Expenditure: $1.997 Trillions
Government Revenue: $1.614
Budget Deficit: $0.383 Trillions = $383 Billions = 20% in only one year!
Among others reasons why this crisis will come soon in Japan are:
The sharp decline of Japanese exports due to yen value increase making Japanese product less competitive.
The reduction of manufacturing exports due to a fierce competition fro South Korea and China, now Samsung Electronics is the biggest technology products oriented company in the world, surpassing Japanese giants such as Panasonic and Sony.
In sake of survival or profit increase most major Japanese companies have exported jobs all over the world specially to China and Malaysia, this trend has contributed to the increasing unemployment rate in Japan. Another bug in Japan economy is the deficient product multi-layer distribution and marketing system to the final consumer, this system employs several millions people that although generates employment are totally unnecessary, this model do not produce any real benefit and makes products more costly to the final costumer. In USA and most western countries depending on volume any store can buy directly from a manufacturer, in Japan the stores normally have to go trough several distribution layers, unfortunately this system is maintained in Japan as “social benefit” untouchable due to the fear on what could happen with all the millions of potential un-employees if an efficient occidental distribution model would be ever implemented. Something has to be done done to reverse this situation before is too late.
The each time more frequent scarce availability of raw materials and at higher prices, in part due to the China increasing appetite and the fact that many traditional raw materials exporters countries are now becoming industrialized, exporting less materials or at higher price or both. This reduces the competitive edge of Japan homeland established companies.
The increasing aging of Japan’s population now with 23% over 65 years, it’s reducing the internal market and the tax revenue base.
The more recurrent feeling among consumers worldwide that Japanese companies are no longer the undefeated kings of quality as recently was found with Toyota, Sony and Toshiba recalling millions of products.
The rapid increase of retired pensioned people in private and public sectors that weren’t significant in the 60’s to the 80’s, in these decades the Japanese companies were more lean and could reinvest more in growth projects, that abundance and leanness is no longer available.
Are you prepared?
http://www.engitek.com/
By Mario Sanchez
Copyrights
http://www.engitek.com/
http://www.industriaytecnologia.com
We have recently been bombarded with news about the Greece and other European Countries deficit crisis, affecting the stocks all over the world. This is only the tip of the iceberg and most reflectors are ignoring a monster crisis ahead, while the Greek crisis sent bad news to the markets, it was just a child game compared to what is the monster emerging in a near future and this will come from Japan, the third largest economy in the world.
Now you know what a comparative troubled little economy like Greece can do to the world, now image what could happen if the third largest economy collapses. Japan was considered from the 60’s to the 80’s the example to follow in growth, efficiency and prosperity even was said at the peek of this bonanza that “A square yard of land in Tokyo worth more than an entire block in Manhattan” this growth bubble created a false sense of wealth and real estate value that soon exploded.
Japan now is facing crucial circumstances never before encountered that unfortunately based on the current condition and trends, won’t be easily diverted or corrected, actually all indicates that it will get badly worst before it gets any better. The problem here is that when this happens it will send gigantic economic tsunami waves all over the globe.
Let face some data and trends:
Japan is the third largest economy in the world with and estimated 4.137 trillions dollars as Gross Domestic Product in 2009 just behind the China and USA, but the government current debt is 192.1% of this GDP, this means that the government debt is almost twice as the value of all products and services generated in one year in Japan!, and more likely will increase sharply in the coming years if the current trend continue.
Lets put just few data to show this scary trend, in order to keep this article short only data from 2009 will be shown:
Source CIA World Factbook and IMF
(Monetary Information in US Trillions Dollars)
Year: 2009
GDP: $4.368 Triilions
Public Debt: 192.1%
Unemployment Rate: 5.6%
Government Expenditure: $1.997 Trillions
Government Revenue: $1.614
Budget Deficit: $0.383 Trillions = $383 Billions = 20% in only one year!
Among others reasons why this crisis will come soon in Japan are:
The sharp decline of Japanese exports due to yen value increase making Japanese product less competitive.
The reduction of manufacturing exports due to a fierce competition fro South Korea and China, now Samsung Electronics is the biggest technology products oriented company in the world, surpassing Japanese giants such as Panasonic and Sony.
In sake of survival or profit increase most major Japanese companies have exported jobs all over the world specially to China and Malaysia, this trend has contributed to the increasing unemployment rate in Japan. Another bug in Japan economy is the deficient product multi-layer distribution and marketing system to the final consumer, this system employs several millions people that although generates employment are totally unnecessary, this model do not produce any real benefit and makes products more costly to the final costumer. In USA and most western countries depending on volume any store can buy directly from a manufacturer, in Japan the stores normally have to go trough several distribution layers, unfortunately this system is maintained in Japan as “social benefit” untouchable due to the fear on what could happen with all the millions of potential un-employees if an efficient occidental distribution model would be ever implemented. Something has to be done done to reverse this situation before is too late.
The each time more frequent scarce availability of raw materials and at higher prices, in part due to the China increasing appetite and the fact that many traditional raw materials exporters countries are now becoming industrialized, exporting less materials or at higher price or both. This reduces the competitive edge of Japan homeland established companies.
The increasing aging of Japan’s population now with 23% over 65 years, it’s reducing the internal market and the tax revenue base.
The more recurrent feeling among consumers worldwide that Japanese companies are no longer the undefeated kings of quality as recently was found with Toyota, Sony and Toshiba recalling millions of products.
The rapid increase of retired pensioned people in private and public sectors that weren’t significant in the 60’s to the 80’s, in these decades the Japanese companies were more lean and could reinvest more in growth projects, that abundance and leanness is no longer available.
Are you prepared?
http://www.engitek.com/
