Excellent write-up! I have high hopes for Japan and the near future, hopefully they will continue to be blessed with excellent leadership in all areas of life.
Hi Jesper, I always look forward to your articles and podcast appearences and appreciate your positive take on Japan. As someone who lives in Tokyo, works in the Japanese & internatioanal financial markets, and has done a lot of individual research on the Japanese economy, net international investment position, etc I too have a very positive outlook on Japan long-term. That being said, I think this article misses the mark.
(1) I don't see how Japan can be at the start of a structural uplift in nominal GDP when real wages have been negative in Japan for almost every month in the last 3 years. To me that means this uptick is cycical in nature, stretched and unsustainable. Further if you see any graph of Japanese nominal GDP you'll see its very cycical with us hitting all time highs at the moment. You can't have sustainable growth when real wages are falling unless you expect to get all the demand from inbound tourists.
(2) You seem to praise the BOJ for dragging their feet on raising interest rates. Yet I think they are simply financially repressing the Japanese people with the most negative real interest rates in the world and the highest core CPI rate in the g10. There is great research on the financial repression being done by the Japanese government on the Japanese people by the St. Louis Fed*. Why do you think USDJPY is at 145 and not 125 as in previous cycles? Its because Japanese realize they are being repressed and are willing to sell JPY at 145 to get their money out of Japan.
In any case please keep the podcasts and articles coming. I'm looking forward to more!
it’s always enlightening to read the opinions and analysis of Jesper on Japan current status. Thanks for sharing!
Thank you, Carlos, for your encouragement — many cheers ;-j
Excellent write-up! I have high hopes for Japan and the near future, hopefully they will continue to be blessed with excellent leadership in all areas of life.
Thank you, Rick, for your kind words…many cheers ;-j
Hi Jesper, I always look forward to your articles and podcast appearences and appreciate your positive take on Japan. As someone who lives in Tokyo, works in the Japanese & internatioanal financial markets, and has done a lot of individual research on the Japanese economy, net international investment position, etc I too have a very positive outlook on Japan long-term. That being said, I think this article misses the mark.
(1) I don't see how Japan can be at the start of a structural uplift in nominal GDP when real wages have been negative in Japan for almost every month in the last 3 years. To me that means this uptick is cycical in nature, stretched and unsustainable. Further if you see any graph of Japanese nominal GDP you'll see its very cycical with us hitting all time highs at the moment. You can't have sustainable growth when real wages are falling unless you expect to get all the demand from inbound tourists.
(2) You seem to praise the BOJ for dragging their feet on raising interest rates. Yet I think they are simply financially repressing the Japanese people with the most negative real interest rates in the world and the highest core CPI rate in the g10. There is great research on the financial repression being done by the Japanese government on the Japanese people by the St. Louis Fed*. Why do you think USDJPY is at 145 and not 125 as in previous cycles? Its because Japanese realize they are being repressed and are willing to sell JPY at 145 to get their money out of Japan.
In any case please keep the podcasts and articles coming. I'm looking forward to more!
*https://s3.amazonaws.com/real.stlouisfed.org/wp/2023/2023-028.pdf
Optimism is such a blessed gift.
"micro optimism" is an interesting concept....