Economic miracles came with big help from friends

Every generation needs a revolution - an entrepreneurial revolution

We often are mystified by the miracle of economic development of neighboring countries.  With no extractive wealth resources these countries managed to be richer than most of other nations.

But they did with much help from friends.    US helped Japan by encouraging it to manufacturing goods and exporting the same to US.  Korea survived postwar with aid from USA sometimes up to 80% of Korean budget and entering into huge contracts with US companies for outsourcing.   China grew big because of outsourcing of cheap products for US retailers.   Taiwan industrialized when under Japan.   It developed its agriculture when it exported food to Japan

We are glad that PHL on its own step by step grew on its own.  By trial and error.   

Secret of how Taiwan got rich

Every generation needs a revolution - an entrepreneurial revolution A deeper understanding of why and how Taiwan got rich. The different system of Japanese colonization. Japan early on helped them become industrialized

Challenges to Japanese Economy: stagflation, 30 years recession, high public debt

Every generation needs a revolution - an entrepreneurial revolution

ADB papers on Japan's 30 year recession/stagflation

Japan was poised as the 2nd biggest economy in the world in the 80s to compete with USA in word economic supremacy.  That did not happen

After the real estate bubble burst in 1980, Japan's economy was never the same:

1.  Inflation was high

2.  GDP growth stagnated

3.  Debt as % of GDP was at 260% (one of the highest in the world)

A slight mistake among theiri economic bosses would turn their currency into "Perang Hapon"as we knew the Japanese currency in WW2. 

Couple this with demise of big companies like Sharp, Toshiba, and weakening of car companies Nissan and Mitsubishi

Tis crumbled my admiration for Japan's management system and their supposed superiority in manufacturing and business.  This post discovered their vulnerability.   Beneath their glitzy city and tourist spot, all is not well for Japanese economy

As of December 2022, the Japanese public debt is estimated to be approximately 9.8 trillion US Dollars (1.29 quadrillion yen), or 263% of GDP, and is the highest of any developed nation. 43.3% of this debt is held by the Bank of Japan.  

(It has not beaten US whose public debt stands at $31 trillion)

From Researchgate: debt as % of GDP of nations

Its challenging to be optimistic in 2023

Every generation needs a revolution - an entrepreneurial revolution

Its a good idea to be optimistic and tough amidst the turmoil in 2023  But look around the external environment:

1.  Big banks in US and Europe failing  (3s in the States, CSB in Switzerland, Deutsche Bank next?)

     What follows, industries failing too?

2.  Europe and US are reported  to be in recession?

3.  The only way that Central Banks and US Feds can control inflation is to put the economy into

      recession -  lay offs so that the consumer will buy less;

4.  Big company closures in Japan:     Sharp, Toshiba, the scandal at Olympus cameras

     (It incurred big losses when it parlayed into stocks, and other unrelated non camera ventures; the

     only saving grace was the Olympus medical)

     Sharp company failure

     Inappropiate accounting procedures at Toshiba

     Japan's 20 year recession - ADB

     We are better off than Japan whose GDP growth was reported to be only 1%;  vs Philippines 6%

      Japan used to be our idol in the 1990s for growth innovation and management

How come Japan is into negative territory?

Rizal Philippines
April 24, 2016

Japan has again fallen intor recession

Japan has been into recession (contracting economy) for several years now.  The President IMF, LaGarde is worried not so much with less developing countries but with Japan. Japans public debt is 237% of its GDP, the highest among developed countries - WSJ  Although yen is now the darling of world currency, she was worried about too much debt of Japan, although mostly yen denominated (US has plenty of debt too - almost trillion dollars)

And its giants like Nissan, Toshiba, and Sharp have been taken over by foreign partners.  Of late, Mitsubishi is in trouble because of its alleged cheating on emission tests (like VW)  Because of the recent earthquake at Kyushu, giant car makers Toyota and Honda have ceased production because of disruption of supply chain.

From Japan Times - Sharp and Toshiba face dire prospects

The combination of  natural calamities, (earthquakes) aging population plus mistakes in fiscal and monetary policies have brought Japan into this challenges.  Let us add management complacency and smugness.  The Japan tiger of yore has become slow, and probably unmindful of world developments which included China.  The Japanese management and technological prowess on Kaizen, QFD, Gemba, TPM 5s was overcome by cheap and mass produced products from China. Everybody was caught unprepared.

Some say that loss of entrepreneurship fueled by conservative Japanese banks who favored large and and ongoing concerns, contributed to loss of innovation and change in Japan.  The likes of Akio Morita of Sony and Konosuke Matsushita who were for sound management and innovation was gone.

IMF chief worried about US shutdown, and even more on raising the US debt ceiling

I watched last night that IMF chief Chiristine Lagarde is very much worried about the US Govt showdown (now on its fifth day) It may have long term damage not only to US economy but to the entire world as well.  US problems/woes could drag the rest of world economy with it.

It is a "mission critical" in a speech she delivered at George Washington University | October 3, 2013 (from Nation)

If US fails to resolve the budget and raising the debt ceiling, US may default on payment of its debt papers and result in massive default (like your credit card company cancelling your credit card) and US may have to pay in cash.  Will this make life for Americans less gloomy (many dont frequent restaurants and coffee shops as they used to pre October 1, 2013

Japan must also reform its economy;  its debt has reached 250% of its GDP with its per capita debt standing at $90,000 for every Japanese.

Do you agree with Christine?  Earlier, I made a post on the bad shape of Japanese economy.  Is Japan now suffering for its WW II sins?

Many of the Asian markets were lower yesterday due to US shutdown.

Are Asian markets and US related?  Can you see the relevance of US problems and Asian capital markets?