The BOJ's Holding The Line And Why Diet Members Do Not Like It

PLEASE WAIT LOADING ,,,,,,,,, Someone has finally printed an article in English which defends the Bank of Japan's independence and policies. Predictably, the responsible publication is the Financial Times (E) which as recently as yesterday I was chiding for its tendency to plunge its Japanese interview subjects into hot water.

Amidst all the noise "that the bank should be doing more" it is refreshing to read an article observing that the BOJ is doing all that can be done and still maintain the appellation of "bank." The BOJ is not a berserk ATM responsible for counteracting the incredibly bad fiscal policies of countries around the globe. Since the BOJ cannot succeed in this endeavor it is pointless for the bank to attempt it.

And a cleverly run bank the BOJ is, having posted in fiscal 2011 an unexpected and tidy profit in its bond dealings. (E)

As for reports that Diet members are preparing legislation to rein in the BOJ's independence, regranting the Finance Ministry the powers the MOF lost over the BOJ's policies -- or merely to terrify the BOJ into pre-emptively ceding part of its independence from government interference so as to preserve the larger portion of its independence -- the drafting of legislation is what lawmakers do, whether or not such legislation will have significant effects on the economy's performance or not. (E)

Frankly, noting that legislators are preparing bills with the intention of curbing the BOJ's independence is a little like noting that bonobos have sex. (E)

That legislators would want to be seen as doing something, anything, to arrest deflation is understandable. Deflation, as analyst extraordinaire Naomi Fink recently pointed out, diminishes the willingness of companies to borrow (increasing, as it does, the real interest rate borrowers pay) and hammers the stock markets (by inducing companies to raise funds through the issuance of new equity, diluting the value of the holdings of existing shareholders).

That deflation simultaneously delivers real, nontaxable returns on savings is something legislators possibly do not know, have forgotten or ignore as it has no impact on their being able to hit up corporations into paying for fundraising party tickets or for candidates to win the votes of those who live on the margin and are thus unable to save.

So rather than being about doing something, BOJ bashing seems to be about appearing to be doing something.

Update On Nobody Pays Retail

PLEASE WAIT LOADING ,,,,,,,,, In order to check the figures in my post of the other day, I took a detour to the rice section of my local supermarket. I found that I had been too generous in my quoted figures. Uonuma Koshi Hikari, the most prized rice, was 3480 yen for the 5 kilo bag, not 3850 as I had remembered it. As for the low price substitute, the supermarket had 5 kilo bags of Koshi Hikari from other parts of Niigata Prefecture, the prefecture reputed to grow the best rice, for 2180 yen, well below the 2850 figure I quoted for what are less popular strains of rice from less-well-regarded growing areas.

All this fact-checking was possibly for naught, however. The comments section of my earlier post offers a revelation of spicy duplicity, which, upon reflection, is an obvious bit of cheatin' in order to stick it to the The Man Back At HQ.

Nobody Pays Retail

PLEASE WAIT LOADING ,,,,,,,,, These, according to Business Week, are the prices one pays for goods in Tokyo:

No. 1 Most Expensive City: Tokyo
Quick lunch: $20.80
Beer at a bar: $10.56
Kilogram of rice: $9.80
Dozen eggs: $4.50
Movie theater ticket: $23.80

(Link)

Has anyone ever paid these amounts, even at 80 yen to the dollar, except in Azabu-Juban or at inside an international-class hotel?

The highest class Koshi Hikari from Uonuma in Niigata-ken (Niigata connoisseurs prefer rice from Sadogashima, but that is another story) costs me 3850 yen for the 5 kilo bag at my local supermarket, which works out to $9.63 at 80 yen to the dollar.

But I never buy Uonuma Koshi Hikari. I might accept it as a gift but I would never buy it myself. I am more than happy with Akita Komachi at 2580 yen or Tochigi Koshi Hikari at 2850 yen per 5 kilo bag. However, even these I prefer to buy on sale, which they are at least once a month.

A dozen eggs at $4.50? First of all, you cannot buy eggs in a dozen, not formally: eggs in this blessed land come in packages of ten -- as they should in any country with a commitment to the decimal system. Second, the most expensive eggs at my supermarket come in at 298 yen for a package, which if you upped it to a dozen, then divided by 80 yen to the dollar, comes to $4.47.

Whisper close, but again, I baulk at buying eggs at 298 a package. Eggs at 258 yen for 10 is my speed.

The same holds true for almost every price one sees quoted in these lists, whether they are compiled by ECA International, The Economist Intelligence Unit or whomever. Whenever sees the prices residents in the blessed must supposedly pay, even in high-priced Tokyo, one suspects that the test shoppers made at least one trip to Meiji-ya in Hiro, which is like calculating fruit costs based on a trip to Senbiki-ya -- something one does to get a good laugh, not a serious result.

Even if one drops the likely cost-skewing culprits -- the aforementioned Meiji-ya, Nisshin World Delicatessen and Mitsukoshi (for clothes, perfume and accessories) -- nobody ever pays retail for anything. There is always a coupon, a time-limited sale, a price for employees of keiretsu ally or, if one is willing to gamble a little, a low-cost alternative source.

The gamble sometimes does not pay off, as the unfortunate passengers on a Tokyo Disneyland-bound bus found out in horrifying way on Friday (E). The regular fare on a JR expressway point-to-point passenger bus from Kanazawa to Tokyo Disneyland is 7850 yen. This type of bus transportation is strictly regulated as to its operations, particularly the number of hours a driver can be on the road during a given span of time.

However, the passengers on the deadly bus ride from Kanazawa paid only 3500 yen for the same trip, based upon the semantic subterfuge of labeling the bus a "tour bus." Regulation for the operations of tour buses are much more relaxed than those for point-to-point buses, meaning that the same driver can drive many more hours, lowering the unit labor costs, which make up a significant portion of the cost of the drive. (J)

The accident and the likelihood that cost cutting measures shortcuts were taken demonstrate that outside the purview of the providers of information for the international traveling set, this blessed land is becoming more like other countries. Safety regulations can be and are circumvented -- and as the customers move downscale in terms of their consumption patterns, they will encounter these heretofore atypical tradeoffs more and more often.

An aside, but did anyone notice how it took only a day for the police to raid the premises of the tour bus company and the home of the company's owner in search of evidence of illegal cost-cutting practices -- but a month to decide raid the offices of AIJ Advisors after the story of the obvious Ponzi scheme made the papers and the news broadcasts?

Any chances that in the intervening month, AIJ executives might have altered, deleted or destroyed evidence?

A double standard in an underregulated industry, would you say? (E)