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"Virtuous Poverty" Part I: The shout hits the fan...

Note: you may need to glance at my previous post for a sense of what I'm on about here....

1970. Groovy. What four digits could be juxtaposed to create so gloriously evocative a date?

On the global scene, it was the year of the hot-headed Mexico World Cup, the melodramatic Apollo 13 mission, the  break-up of the, by then, shaggy-haired Beatles and the pukey death of Jimi Hendrix.

In Japan in 1970, even more extraordinary things were afoot: the Japan Red Army hijacked a JAL flight (groan), Sony listed its ADRs on the New York Stock Exchange (gasp),Yukio Mishima topped himself in spectacular style (retch), Nagoya's first Kentucky Fried Chicken opened (drool) and, perhaps most significantly, a youngish Tokyo couple bought a Sanyo EF-6EZ home-use electrical fan (er..).

You could almost smell the heady madness of those crazy "flower power" times in that young couple's buying decision.

For little did they know it, but by purchasing that Sanyo EF-6EZ home-use electrical fan, this unhappy pair was not paying to cool itself amid the humid blast of the Tokyo summer, but merrily inviting fiery death into its home. A flaming demise that would befall this benighted pair only after the fan had functioned perfectly for 37 years, but death all the same...

"Virtuous Poverty" - the rot at the root?

My brother-in-law is staying for three weeks, the new Japanese cabinet is rubbish, the market just took a big whack in the chops and I can't drive my lovely Skyline for another 22 days.

Fortunately my favourite author, Jasper Fforde, has a new Thursday Next novel out and it is already cheering me up no end. But before Fforde's jolly prose transports me wholeheartedly back into my usual merry state, I have one last miserable demon to slay. Why, I keep asking myself, do people say "lost", when they mean "stolen"? Looked at one way, Japan's "lost decade" was not a "lost" decade at all. It was ten years of grand larceny from the very people that made the country great by use of a cunning, brilliant con-job.

To put a finger on the precise nature and origin of the con is tricky - and that is part of its brilliance.  It is one of the best-wrought pieces of propaganda of the late 20th Century. Here are just a few pointers that hint at the enormity of the thing:

1) people led to believe that they are part of a giant middle class 2) people led to believe that it is the size and cohesion of that middle class that explains low street-crime etc 3) people told vaguely that deflation is bad, but never given a proper explanation for why that is so 4) people led to believe that corporate Japan views its employees as "stakeholders" on an equal (if not greater) level with shareholders, suppliers and customers 5) people persuaded that companies will reward them as soon as it becomes possible to do so 6) people led to believe that the economic polarisation of the country will be its undoing.

But towering over this beautifully constructed set of illusions is one almighty evil myth. Utterly destructive in nature, but oh so benign in appearance. The concept of "virtuous poverty". A concept bestowed upon Japan that naturally comes with the same cosy sense of history that accompanies most of the nonsense bestowed upon Japan. The embracing comfort of history allows the illusion to seep so easily into the "well we've always been like this" mindset. The Neanderthal thinking is thus: "our Japanese forefathers - the Samurai, ninjas and all that codswallop - bore virtuous poverty like the men they were. Grrrrrr. So we should too...grrrr. Profit and wealth bad...grrrr...poverty and disincentives virtuous..."

Balderdash.

"Virtuous poverty" as implicitly preached in Japan is a repugnant idea. Because it is not about the virtuousness of honest, low-paid toil and the innocent struggle to make ends meet. It's about the specific virtuousness of not trying to be rich - as if wealth, profits and money itself somehow impinge on one's ability to lead a good life. And the evangelism of "virtuous poverty" has now, I contend, got out of control.

Nobody should morally countenance allowing huge parts of the population to endure the concepts of "virtuous racism" or "virtuous sexism", but somehow "virtuous poverty" slips through Japan's increasingly clapped-out sanity filter. You could, I suppose, argue that all these poison pills installed throughout corporate Japan are examples of "virtuous racism" as companies prepare to ward-off the foreign devils. Persistent pay inequality is also, I suspect, the tacit expression of "virtuous sexism". 

But it is virtuous poverty that interests me most and I'm going to devote three whole postings to this subject. Starting way back before I was born....in 1970

The Skyline vs. The Party Line

The pathetic pot plant you see on the right sits beside my computer, has slightly yellowish leaves and is all that stands between you, me and the vengeful wrath of Mother Nature's Armageddon.

And it has come to this. I am sitting at my desk on the phone to some senior wonk at the BoJ, wringing sweat out of my shirt and mopping-up a jar of stinking biomass that has just spilt all over my trousers. Sitting bare-chested (and panting like a hippo in the rutting season) I risk being sued for sexual harassment by Kyoko or Taeko, The tireless Times assistants who genuinely should not be exposed to this kind of thing. It is 34 degrees outside, 90% humidity and the only thing I have to retain any sort of poise is one of those little terry-cloth towlettes that fat men dab their brows with on hot days.

My hands are caked in indelible black oily grime because my chain flew off near the Romanian embassy and I have just downed a litre of green tea to slake my raging thirst. About half of it ended up drowning my business cards, which I keep in my shirt pocket, bugger them.The girls on the reception desk downstairs have stopped bothering to conceal their guffaws as I stride soggily into the Yomiuri building with my right trouser leg rolled up. Official warnings for parking my bike in the wrong place have just, today, entered double figures.

But it is worth every bead of sweat and titter of cruel mockery - by enduring this perspiring purgatory on weekdays, I get to drive this insanely erotic 180kmh baby at the weekends: (I'll explain the logic below)

   

Carry On Yenning - Hooray! Everyone's favourite lunacy is back...

Currency markets are going nuts. And I mean nuts. Teal'c (see The Times Snitch List) has just called to say he can't make lunch: he's having a sandwich at his desk on "steak and chips" Thursday. Crazy? A  world gone mad? I fully expect it to start raining frogs any second...

So Bank of America chugs $2 billion into Countrywide and all seems right with the world.  The yen carry trade has just restarted in earnest: yen cross rates are bouncing around like a forgotten cuff-link in an industrial washing machine's final spin cycle. Sterling-yen is back to a level where my Nissan Skyline 3.5litre coupe (more on this later) doesn't seem too dear. After the Bank of Japan announces its rate decision this afternoon, I'm going boozing with an equity derivatives guy from Mitsubishi UFJ who actually thinks he might get a bonus this year. It's bonkers.

Anyway, trawling through some delightful summer flea markets in Tokyo, I found the following antiquated poster for a film that I don't recall seeing in my bumper DVD box set of feeble B-movie comedies from the early 1960s...

     

        ---- Up The Yen ----

A hilarious comedy of "lark"-to-market dysfunction and carry-trade capers starring all your usual favourites:

Kenneth Williams as Toshi Smallbeans, The Governor of the Bank of Japan ("Ooh stop messin' about"), Sid James as 'Edge fund 'Arry ("blimey, Bern, we're done for"), Bernard Bresslaw as Lehman Sachs (Oh! Sorry, Sid..."), Hattie Jaques as Mrs Tanaka ("I'm not getting any...interest"), Barbara Windsor as Standard & Moody ("A double-D credit rating, oooh, saucy!")  Charles Hawtrey as "Honest" Abe Nippon ("I do not object to jiggery but I take exception to pokery!").

The gang is back with its most outlandish comedy ever! Yes, even funnier than classics like "Carry on Deflation", and "Carry on Pork Barrel" - Carry on Up The Yen is Sid and Bernie's biggest adventure yet. Unlucky in love and nursing a massive loss on the horses, 'Edge fund 'Arry gets a call from his chubby broker (played by Terry Scott). Persuaded that there are japes to be had at a naughty campsite in the English village of Little Arb-in-the-Stat, 'Arry calls his chum, Lehman Sachs, they make sure that  local tart "Double-D" Standard & Moody is along for the ride, leverage-up 20 times and the fun really begins! Little do they realise that the resort at Litte Arb-in-the-Stat is actually a nudist colony that's going to leave them all exposed!

Notorious miser, Toshi Smallbeans isn't giving much away but he is desperate to be a little more "interesting" to the birds. Meanwhile Mrs Tanaka, after 10 years frustrated neglect by her husband, "Honest" Abe Nippon, takes a fancy to a tall stranger from New Zealand with an 8.25-inch overnight rate...

Kill Bill - the NikkoCitigroup way...

In the midst of all this terrible market bedlam, I'm delighted to hear that the artistic temperament still burns hot on the trading floors of our largest investment banks. Who would have guessed that, in the dealing rooms of NikkoCitigroup, there lurked a suit with the talent to be a Hollywood scriptwriter?

The story goes like this. A couple of weeks ago our hero - some relatively senior broker at NikkoCiti - was entertaining some visitors from out of town. To give them a genteel flavour of the place, he took them to a quiet little bar in Nishi-Azabu called The Black Rose. A charming, cosy joint where the friendly staff have a penchant for light floggings.

The visitor, as is so often the way in Roppongi, got a little carried away. Booze, brokers and bondage are a fiery cocktail and before you know it, our hero is forced to bellow the following warning to the out-of-towners: "Careful man! Don't antagonise the chick with the hot wax and whips."

In the sort of coincidence that only happens in the movies, who should be sitting at the next table but Quentin Tarantino - the notorious Japanophile and, it seems, regular at the Black Rose. Overhearing the noisy advice issuing from the NikkoCitigroup table, the great director leaned over in some excitement and said: "I'm using that line in my next movie!".

It's actually high time Tarantino did a flick about investment bank trading floors - more or less the only environment (apart, perhaps, from a West Compton crack house) where his expletive-charged scripts would not sound contrived...

Sweat, baby, sweat...

Alright. I may have been a bit hasty with my dismissal of Nintendo's stock price rise.

The reason for this crimson-faced volte-face can be summarised in two simple words: Billy Blanks. For  those not au fait with the self-induced sweatiness of fitness-crazed Japanese ladies, a word or two of explanation. Billy Blanks is a 52-year old motivational martial arts entrepreneur who, in search of a flashy new name for a frenetic workout video crossed Tae Kwondo with Boxing to create Tae Bo. (The world will never know how different things might have been for Billy  had he opted to call it "Kwoxing".)

Anyway, after a few dismal film appearances - he excelled as Black Rose in the 1989 chop-socky flick "Bloodfist" - Billy struck gold in Japan. His DVD fitness series "Billy's Boot Camp" has just, astonishingly, sold its millionth copy. And all it took was a relentless 6-month television campaign on daytime cable television...

ShinGinko Tokyo: the crumbling icon of imbecility

There is there a wonderful moment at the finale of V for Vendetta where the vile Mr Creedy and his crew  have just emptied their guns into V, who remains defiantly upright. "Why won't you die?", screams an enraged Creedy, the veins popping on his neck.

Well, for all you fans of ShinGinko Tokyo - the revoltingly wasteful and pointless ego-trip banking project created by the insufferably arrogant Tokyo Governor Shintaro Ishihara - that same sense of baffled frustration is here. I simply don't know why this sputtering wreck of a bank won't die.

For two years, this hapless institution - conceived in wicked deception and executed with astonishing incompetence - has squandered $1 billion of taxpayers' money. In an era where Japan's notorious pork barrel was going out of fashion, ShinGinko was its repugnant, unwanted rebirth clad in the sickening pinstripes and marble-floors of a modern service economy (or at least, Ishihara's palsied vision of same). Loaded-up with the rejects of Japan's already second-rate banking system, ShinGinko's job was to hand out loans to companies that couldn't get them from the then even more conservative megabanks. ShinGinko's credit ratings system was worthless from the start, and the bank's function, as far as I can tell, was simply to pump capital into crumbling businesses that were clearly in danger of bankruptcy when the money was lent.

It's classic pork barrel stuff. So Ishihara gets his votes from the SMEs and their employees who owe their livelihoods to the loans (most of which have now turned bad) and the slack-jawed Tokyo taxpayer watches as $1 billion is unashamedly pissed-away on this transparent political gambit. And then resoundingly votes Ishihara in for a third term.

Today, finally a glimmer of hope. ShinGinko said that it was closing down about all its ATM machines and shutting a third of its branch network. It expects to make about Y700m in cost savings by laying-off the employees at those branches. Ishihara has said he has no plans to close this monstrosity down, but then he also said in 2004 that this bank was going to be a great success...   

Into the belly of the beast

Yesterday, as reported in The Times here I toddled off to Kashiwazaki to spend a day looking around the town and the nuclear power plant that has been switched off pending an investigation into whether it will   ever be safe enough to switch back on.

One particular friend of mine, a former utilities analyst to whom I happily defer on many matters, has accused me of over-egging the "Japan may need to shut a lot of its nuclear sites and make them stronger" line. Well, perhaps. But I was allowed to nose around the site yesterday, and I have to say - as a fully professed layman - that I found the whole experience extremely disturbing.

With apologies for my poor photography, let me take you through my day yesterday, starting with the image on the right. The sign is a little hard to read, but it is the Nuclear Emergency Assembly Area for the village of Kariwa next to the plant. The wooden building, now visibly wrenched apart, bears the yellow poster meaning it is officially no longer safe to enter. Not, perhaps, the ideal structure to head for if the earth is quaking and the nuclear plant next door starts fizzing.

The long arm of the paw - part II

A couple of days ago, I was (perhaps unfairly) lampooning cops in Thailand for using images of Hello Kitty to shame officers of the law who failed to meet the high standards expected in the crack Crime  Suppression Division.

Now, to my unabashed joy, I find myself fully justified in ragging the Thai cops. You see, when the story broke about the Kitty armbands, the Japanese media (having little else to do these days) placed hundreds of calls to the Thai police to confirm that this odd plan was genuine. Somewhere among those calls, it seems, someone asked Bangkok's finest whether they had actually paid Sanrio for the copyright to use Kitty's delicious little face as part of their loony scheme.

The Crime Suppression Division, while it may be very good at suppressing some crimes (like being a tourist, or being the democratically elected president), is evidently not terribly good at spotting MASSIVE INTELLECTUAL PROPERTY THEFT when it is carried out by its own senior officers. The plan, I understand, has been abandoned, presumably while the CSD comes up with some equally cute character to perform the same embarrassment function when applied to errant officers' uniforms.

May I suggest another theft from Japan? Of the Tokyo Metropolitan Police Department's curious mascot. The more you look at this little fellow, the more he actually is quite like so many of Tokyo's finest...poorly equipped for crime-fighting and, er, constantly caught with his pants down.

Three reasons why the banking crisis of 2003 was so good for Japan

A little rushed this post, as I am heading off to Kashiwazaki tomorrow to don a lead-lined cod-piece and venture into the nuclear power plant that started popping and fizzing after the massive Niigata earthquake three weeks ago. You know...the one that has left the Japanese nuclear industry in a bit of a state and  allowed some very learned professors to tell us that we are all doomed if the plant at Hamaoka gets caught in a moderate quake.

Anyway. Seems strange that the market is giving the banks such a pasting on the back of the sub-prime  panic in the US.The brains at CLSA have been giving us some very grim numbers to justify the J-banks selloff, while a somewhat calmer report by David Threadgold of Fox-Pitt Kelton suggests the exposure is actually well within the bounds of what both the megabanks and the regionals can handle.

It has caused me to wonder whether the Japanese banks might very well be spared the worst of the sub-prime fallout precisely because they were so terribly, terribly screwed four years ago. Here are three reasons why the banks crisis may, in retrospect, have been a boon.

1) As mentioned above, the crisis insulated the Japanese banks from the US nightmare. In 2004/5/6, when sub-prime and all its concomitant horrors were brewing, the Japanese banks were on their way out of a white-knuckle crisis that took most of them to the brink of oblivion and did emphatically not produce dealing-floors full of cigar-chomping bulls ready to pounce on any scrap of high-yield tush. The banks were, to summarise a) not flush enough of throwaway cash to chuck it abroad with any great enthusiasm b) cripplingly conservative c) heavily scrutinised by the regulators d) domestically focused e) petrified by the very concept of debt.

2) Heizo Takenaka was allowed to get stuck into the problem. He had his critics, and he had his moments of cack-handedness, but Takenaka cleared up a stinking mess far more quickly than anyone would have guessed and did so under a constant salvo of poisonous Nikkei and Yomiuri editorials. What Takenaka represented for Japan, though, was far, far more important. It was among the first times that both the LDP and the bureaucracy were forced, at metaphorical gunpoint, to admit that there was not a single person in their ranks capable of sorting out a private-sector problem as dire as the banks crisis. It was a turning-point for the command economy mentality of Japan. Takenaka's career may eventually have taken him (grudgingly) into the Upper House, but for a while he was pretty much the most powerful non-bureaucrat, non-politician that Japan had produced. Inadvertently, the banks crisis offered a glimmer of hope - that, sometimes, the government might turn to the best person for the job, rather than choosing from a talentless cast of superannuated  punch-clockers.

3) Japan Inc collectively remembered its traditional  "Rainy Day" attitude to cash reserves. Given the Japanese government's ability to create rainy days from nowhere (eg consumer credit market), it was an attitude that resurfaced in Japanese boardrooms in what may now be thought of as being "in the nick of sodding time". From the foreign raider standpoint, the cash-hoarding makes Japan a frustrating string of opportunities slavered-over and then lost. Look at all those companies, say the likes of the Children's Fund and Steel Partners, with all those hideously inefficient balance sheets. Let's force these people to return some of that lovely and currently useless lolly to shareholders, they say.  They can say it all they like, but suddenly, with global credit markets giving investors a strange tingling feeling in their loins, Japanese companies don't look quite so loony for hoarding their hard-earned and resisting greater levels of leverage.

The long arm of the paw...

One of the many great things about visiting Thailand is the astonishing concentration of books (in English) that describe the ferocity of Thai cops and the brutality of the Bangkok prison system through the eyes of some scraggy drugs smuggler who survived by eating woodlice and his own hair.

But a somewhat softer picture of Bangkok's finest has now been painted, and I'm delighted to report that it involves none other than Hello Kitty - the mouthless white feline whose simple lines enchant their way to billions of dollars in annual toy sales. According to a piece in today's Thai papers, cops in the charmingly-named and doubtless hard-as-nails Crime Suppression Division will be forced to don the image of Kitty-chan if they screw-up in some way. On an armband, so everyone can see the big bad copper with a cute little kitty.

"This new approach is intended to engender a feeling of guilt and discourage them from repeating the offence," some senior Bangkok fed explained yesterday, as this scheme was foisted on a public that remains under the control of a military junta.

Screw-ups, said the Bangkok Post, would include parking in restricted areas and turning up late for work. Beating-up tourists, as before, will presumably remain acceptable conduct.

Four reasons Tokyo will never be a global financial centre

The chatter is certainly very positive. We have an "open skies" proposal here, and an "Asian gateway" plan there. The FSA and the FTC are both beefing-up their authoritarian little operations with authoritarian little bureaucrats. "Working groups" from METI have been dispatched on missions to London to have a poke around Canary Wharf and see what a "real" financial hub smells like. Big private equity outfits like KKR and Permira have amassed their billions and are supposedly ready to bathe Tokyo in the golden blaze of capitalism.

Oh yes. Oh dear no. When it comes to the lingo of lucre and the rhetoric of reform, Japan's breathless  talk of "Tokyo as global financial centre" is rather like an evangelist faith-healer dragging a blind cripple to the front of the stage, kicking his white stick and crutches into the orchestra pit and screaming: "You can see! You can walk!"

I'm sure that there are very worthy and complicated ways of accurately plotting Tokyo's future as a global financial centre: the sort of thing to which my chums down the corridor at The Economist devote plenty of sweat but never seem to reach a solid conclusion (very possibly because there isn't one). My methodology is far more simple. Four people. Four Tokyoites of different ages and backgrounds. Four lives which, in combination, prove conclusively that Japan's capital cannot, on its current path, expect to compete on a global scale.

They are:

Fumie the Fuming, Apoplectic Arthur, The Raging Retiree and The Gutless Graduate

Get ya motor runnin'! Head out on the Blu-Ray!

Lookin' for adventure! Whether bi- or straight or gay! ...

Porn to be wi-i-i-ild...

Ah yes. Porn. Or, as The Times house style would doubtless prefer I label it, "adult entertainment". A friend to the lonely, a fillip to the listless, a scourge to the prissy. It is porn that has, time and time again, decided the ultimate fate of so many new technologies. If video did indeed kill the radio star, as the Buggles so painstakingly asserted, it was because video got in so quickly and created the porno star.

The internet, supposedly construed to help MIT professors chat with astronomers in Australia, or to let us keep emailing each other in the event of nuclear war, became the force it now is because of porn. Millions and millions of clicks in search of porn. The famous Google algorithm makes everyone's life immeasurably easier, but its greatest power (let's face it) is the ability to pin-point precisely the perversion a given searcher is after.

And now, once again, the porn industry will wield its mighty sword and make its Solomon-esque decision in the battle of the DVD formats. It's HD-DVD versus Blu-Ray in a no-holds barred (or censored) fight to the death. The early signs were good for HD-DVD but it appears that the Japanese porno industry has staked its not inconsiderable reputation on Blu-Ray - the super high-definition format, which, to quote a senior Sony executive, "allows you to see every hair".