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It got killed by financial engineering in the end. No sanely run company can survive competition from a company structured to take advantage of low interest rat

It got killed by financial engineering in the end. No sanely run company can survive competition from a company structured to take advantage of low interest rates and public/private partnerships

alephnerd 2y ago
> It got killed by financial engineering in the end Real interest rates in Japan were on par with in the US in the mid-2000s [0], and only entered the negative range when the US began dropping interest rates to near 0 during the GFC [0]. The bigger issue in was the hangover of the 1990s Japanese bust which lead to larger players tightening their belts at the expense of smaller players [1] The big players in Japan are also similarly old (usually 300-500 year old guilds converted into corporations/zaibatsus in the 19th century) There is also a succession crisis brewing in plenty of Japanese, Korean, and Taiwanese businesses. One person in my network is leaving American Tech PE/VC to concentrate on buying out Korean and a Japanese companies facing issues around succession now - just like American SMEs businesses faced in the 1970s-2000s. Ik people like to shoehorn the Japanese experience to extrapolate American and Western policy, but the Japanese economy is structured very differently from Western economies with an entirely different view on antitrust (ambivalent to opposed), welfare (highly supportive), inflation (keep it as low as possible), and state intervention (highly supportive). The only developed countries that can safely be compared to the Japanese economy are South Korea and Taiwan (maybe Dirigisme-era France and Italy pre-1990s, but they had the benefits of the EC/EU which made stuff significantly different). I recommend reading "The Japanese Economy" by Takatoshi Ito and Takeo Hoshi [2] and "Corporate Financing and Governance in Japan" by Takeo Hoshi and Anil Kashyap [3] [0] - https://data.worldbank.org/indicator/FR.INR.RINR?end=2013&locations=JP-US&start=2001 https://data.worldbank.org/indicator/FR.INR.RINR?end=2013&lo... [1] - https://www.japantimes.co.jp/news/2000/01/03/national/execs-reckoning-small-firms-still-need-help-inaba-says/ https://www.japantimes.co.jp/news/2000/01/03/national/execs-... [2] - https://mitpress.mit.edu/9780262538244/the-japanese-economy/ https://mitpress.mit.edu/9780262538244/the-japanese-economy/ [3] - https://mitpress.mit.edu/9780262582483/corporate-financing-and-governance-in-japan/ https://mitpress.mit.edu/9780262582483/corporate-financing-a...
- deleted 2y ago
  [deleted]
- underlipton 2y ago
  The Japanese bust (well, the bubble that lead to the bust) was itself partially engineered, as a clever bit of American protectionism. The Plaza Accord prompted the BoJ to cut interest rates, leading to a brief period of cheap and easy money that completely destroyed the remarkably solid and sustainable economy Japan had built post-war (sounds familiar?). >with an entirely different view on antitrust (ambivalent to opposed) Post-war, Japan (with the American occupation's "help") did what would be unthinkable to American businesses, taxing the personal wealth of company heads up to ~85% and purging them from their companies. This left much of Japan's industry essentially controlled by the government.
  - alephnerd 2y ago
    I recommend reading the sources I listed in my initial comment (they are written by senior leadership and advisors at the BoJ from that era). Furthermore, these are all texts that are expected reading in any upper level Asian Economics class. > leading to a brief period of cheap and easy money that completely destroyed the remarkably solid and sustainable economy Japan had built post-war The biggest cause was bad loan issues caused by lack of auditing and due dilligence. [0] In that era, the BoJ would set a quota on loan origination (called a window guidance) that Japanese banks needed to meet (p.s. China used to do the same thing til 2015 which is a major reason for China's current real estate crisis) The Plaza Accord would not have had as severe an impact if Japan's Window Guidance policy didn't incentivize business loans with minimal due diligence. > Post-war ... purging them from their companies And they completely reconstituted themselves in the 1950s by adopting the Keiretsu corporate structure where a single asset management firm controls all the broken off assets of the initial zaibatsu. This is what Mitsui, Sumimito, Mitsubishi, Fuyo, etc did. Take a look at NYT reporting about this from 1954 [1] Japan also does not have a wealth tax. > This left much of Japan's industry essentially controlled by the government Japan always had a high amount of government intervention in it's economy. MITI was the driver of Japanese industrial policy. I recommend reading "MITI and the Japanese Miracle" (1982) by Chalmers Johnson to dig deeper into the history of interventionism in the Japanese model [2] ------------- While the Plaza Accord did have a significant impact on the Japanese economy, the recent politically driven "pop econ" Plaza Accord view needs to die [3] Like anything else that's pop-anything, it's so broadstrokes that it's bordering on misinformation. [0] - https://www.imes.boj.or.jp/research/papers/english/me19-s1-14.pdf https://www.imes.boj.or.jp/research/papers/english/me19-s1-1... [1] - https://www.nytimes.com/1954/07/17/archives/japan-again-plans-huge-corporations.html?sq=ogasawara&scp=46&st=p https://www.nytimes.com/1954/07/17/archives/japan-again-plan... [2] - https://www.sup.org/books/title/?id=2791 https://www.sup.org/books/title/?id=2791 [3] - https://www.imf.org/-/media/Websites/IMF/imported-flagship-issues/external/pubs/ft/weo/2011/01/c1/_box14pdf.ashx https://www.imf.org/-/media/Websites/IMF/imported-flagship-i...

It got killed by financial engineering in the end. No sanely run company can survive competition from a company structured to take advantage of low interest rates and public/private partnerships

alephnerd 2y ago

> It got killed by financial engineering in the end Real interest rates in Japan were on par with in the US in the mid-2000s [0], and only entered the negative range when the US began dropping interest rates to near 0 during the GFC [0]. The bigger issue in was the hangover of the 1990s Japanese bust which lead to larger players tightening their belts at the expense of smaller players [1] The big players in Japan are also similarly old (usually 300-500 year old guilds converted into corporations/zaibatsus in the 19th century) There is also a succession crisis brewing in plenty of Japanese, Korean, and Taiwanese businesses. One person in my network is leaving American Tech PE/VC to concentrate on buying out Korean and a Japanese companies facing issues around succession now - just like American SMEs businesses faced in the 1970s-2000s. Ik people like to shoehorn the Japanese experience to extrapolate American and Western policy, but the Japanese economy is structured very differently from Western economies with an entirely different view on antitrust (ambivalent to opposed), welfare (highly supportive), inflation (keep it as low as possible), and state intervention (highly supportive). The only developed countries that can safely be compared to the Japanese economy are South Korea and Taiwan (maybe Dirigisme-era France and Italy pre-1990s, but they had the benefits of the EC/EU which made stuff significantly different). I recommend reading "The Japanese Economy" by Takatoshi Ito and Takeo Hoshi [2] and "Corporate Financing and Governance in Japan" by Takeo Hoshi and Anil Kashyap [3] [0] - https://data.worldbank.org/indicator/FR.INR.RINR?end=2013&locations=JP-US&start=2001 https://data.worldbank.org/indicator/FR.INR.RINR?end=2013&lo... [1] - https://www.japantimes.co.jp/news/2000/01/03/national/execs-reckoning-small-firms-still-need-help-inaba-says/ https://www.japantimes.co.jp/news/2000/01/03/national/execs-... [2] - https://mitpress.mit.edu/9780262538244/the-japanese-economy/ https://mitpress.mit.edu/9780262538244/the-japanese-economy/ [3] - https://mitpress.mit.edu/9780262582483/corporate-financing-and-governance-in-japan/ https://mitpress.mit.edu/9780262582483/corporate-financing-a...

deleted 2y ago
[deleted]
underlipton 2y ago
The Japanese bust (well, the bubble that lead to the bust) was itself partially engineered, as a clever bit of American protectionism. The Plaza Accord prompted the BoJ to cut interest rates, leading to a brief period of cheap and easy money that completely destroyed the remarkably solid and sustainable economy Japan had built post-war (sounds familiar?). >with an entirely different view on antitrust (ambivalent to opposed) Post-war, Japan (with the American occupation's "help") did what would be unthinkable to American businesses, taxing the personal wealth of company heads up to ~85% and purging them from their companies. This left much of Japan's industry essentially controlled by the government.
- alephnerd 2y ago
  I recommend reading the sources I listed in my initial comment (they are written by senior leadership and advisors at the BoJ from that era). Furthermore, these are all texts that are expected reading in any upper level Asian Economics class. > leading to a brief period of cheap and easy money that completely destroyed the remarkably solid and sustainable economy Japan had built post-war The biggest cause was bad loan issues caused by lack of auditing and due dilligence. [0] In that era, the BoJ would set a quota on loan origination (called a window guidance) that Japanese banks needed to meet (p.s. China used to do the same thing til 2015 which is a major reason for China's current real estate crisis) The Plaza Accord would not have had as severe an impact if Japan's Window Guidance policy didn't incentivize business loans with minimal due diligence. > Post-war ... purging them from their companies And they completely reconstituted themselves in the 1950s by adopting the Keiretsu corporate structure where a single asset management firm controls all the broken off assets of the initial zaibatsu. This is what Mitsui, Sumimito, Mitsubishi, Fuyo, etc did. Take a look at NYT reporting about this from 1954 [1] Japan also does not have a wealth tax. > This left much of Japan's industry essentially controlled by the government Japan always had a high amount of government intervention in it's economy. MITI was the driver of Japanese industrial policy. I recommend reading "MITI and the Japanese Miracle" (1982) by Chalmers Johnson to dig deeper into the history of interventionism in the Japanese model [2] ------------- While the Plaza Accord did have a significant impact on the Japanese economy, the recent politically driven "pop econ" Plaza Accord view needs to die [3] Like anything else that's pop-anything, it's so broadstrokes that it's bordering on misinformation. [0] - https://www.imes.boj.or.jp/research/papers/english/me19-s1-14.pdf https://www.imes.boj.or.jp/research/papers/english/me19-s1-1... [1] - https://www.nytimes.com/1954/07/17/archives/japan-again-plans-huge-corporations.html?sq=ogasawara&scp=46&st=p https://www.nytimes.com/1954/07/17/archives/japan-again-plan... [2] - https://www.sup.org/books/title/?id=2791 https://www.sup.org/books/title/?id=2791 [3] - https://www.imf.org/-/media/Websites/IMF/imported-flagship-issues/external/pubs/ft/weo/2011/01/c1/_box14pdf.ashx https://www.imf.org/-/media/Websites/IMF/imported-flagship-i...