History Repeats Itself: The Deflation Story

banner-deflationEurope has an economic problem. Today on the news I heard that prices in Belgium are not likely to raise. A good thing, you might think, but a little bit of inflation (sustained increase of the general price level) is actually a feature of a healthy economy. In Germany and Spain as well consumer prices fell and provoked a fear of deflation (decrease in the general price level). At first lower prices may seem great for the consumer, but eventually people will delay their purchases because things keep getting cheaper. In the end, deflation causes poor economic growth. And worse, deflation may result in a deflationary spiral (decreases in prices -> lower production -> lower wages and demand -> further decreases in price)…

…which is actually the case in Japan since the latter half of the 1990s. This chronic deflation is presumably caused by a collapse in the stock and real estate market (“burst of the bubble economy”), unfavorable demographics, the inclination of Japanese people to save their money, import of cheap Chinese materials and a tight monetary policy. The Japanese economy stagnated and real GDP growth average only reached 0.8% between 1993 and 2012.

deflation-japan-USSince 2012, prime minister Abe Shinzō has been trying to put an end to this longstanding issue. The so-called “Abenomics” focuses on three arrows: fiscal stimulus, monetary easing and structural reforms. The Bank of Japan set a target of 2 percent inflation. By the end of 2013, the long period of deflation was declared over. The first two arrows have been put successfully in action, although many economists question the efforts in structural reforms, essential to turn the entire economic policy of Abenomics into a long-term solution.

The European Central Bank is now working on a quantitative easing program, more specifically buying bonds from the banks to increase flows of credit. This story is to be continued, for sure…

References and Further Reading

“Chronic Deflation in Japan”

“Japan Deflation to End” – Forbes

Abenomics: Preliminary Analysis and Outlook

Abenomics Structural Reform Problem – The Diplomat

– The eurozone needs an alternative solution to its economic woes – The Guardian

Japan Week at KU Leuven

Japan WeekIt is Japan Week at KU Leuven, my university, for the fourth time! A symposium with lectures is held, as well as workshops, documentaries and presentations of Japanese (from Kansai University) and Belgian students. I attended the first day of lectures that dealt with the theme: “Japanese Media Culture: between Globalization and the Galapagos Syndrome”. Very diversified topics were introduced by speakers from different specializations. Especially (digitalized) Japanese pop culture and its appeal throughout the world was discussed. I will briefly review three of these lectures.




First of all, KU Leuven professor Dimitri Vanoverbeke, who teaches us Politics and Economics of Japan, talked about “Japanese Studies in Belgium in the 21st Century: Framing the Impact of Popular Culture”. It is hardly known, but Japanese Studies at KU Leuven are currently more popular than other Language and Area studies, like Chinese Studies or Slavic Studies. When I was in first year, 120 other people started Japanese Studies as well (in third year now, there are roughly 40 students left, though…). Altogether, the number of students in Japanese Studies increased from 78 (2005) to 211 (2011), recorded as the peak year. By 2010, Japanese Studies even became the third largest undergraduate section at the Faculty of Arts.

Japanese Studies has to deal with three paradigms: 1) the language and area 2) economics and politics 3) pop culture. These paradigms were not regarded as equal in the past. Since the 1980s, parallel with Japan’s “bashing” economic period, student’s interest was especially incited by Japan’s miraculous economics. Language and culture were of subordinate importance. It was of course no surprise that the number of students decreased in the 1990s, as Japan’s “passing” period announced the end of “Japan as number one”. So why still study Japanese if the Chinese economy has become more important nowadays?



Yearly enquiries point out that students’ main motivation to enroll in Japanese Studies is in many cases the Japanese pop culture. Especially in 2009, when about 75% of the students’ choice was influenced by manga, anime and Jpop (music). Nevertheless, Japanese pop culture is not the only reason, as the students expressed to have interest in history and economics as well. It is more like a combination of different aspects wherein Japanese pop culture forms the bridge between our daily life and the Japanese world. This tendency can also be observed in other European countries.

An example of the globalization of Japanese pop culture is the success of Japan Expo, a 3-day festival hold in Brussels. This year, around 232.000 people attended the festival, and enjoyed 125.000 m2 of stands and stages. This indicates that Japanese pop culture is in fact doing very well. It is a general phenomenon in Europe, instigated by globalization.


To improve this spread of Japanese culture, professor Vanoverbeke draws attention to the importance of social sciences. KU Leuven offers services like sites, a Japanese-Dutch dictionary and projects (e.g. Let’s Manga). All of these digital devices do not only provide passive knowledge, but expect students to participate in the learning process, and stimulates an active knowledge exchange.

japanweekSchermafbeelding 2013-11-07 om 00.00.28

The next speaker was professor Naoko Mori from Kansai University with “International Circulation of Japanese Comics (Manga)”. She talked about the change in distribution routes of Japanese manga in China. In the 1990s, Japanese manga and anime grew more popular there. Its distribution was controlled mainly in big cities, what resulted in the distribution of pirated editions in the rural areas. In recent years, we see a decrease in Japanese anime broadcast, as the Chinese government wants to protect domestic animation products. There are also regulations on pirated editions, but these cannot stop the increase in illegal scanlations. As soon as one day after the Japanese release, Chinese translation can be found on the Internet.

Fan culture is booming as well in China. In the 1990s, the first Dōjinshi 同人誌 (self-published manga works) emerged. In the 2000s, comic cons were held and manga clubs were established at schools. At Beijing University in 2011, no less than 800 students were members of the manga club! In recent years, Dōjinshi has evolved into real, popular Chinese comics.

Studio Ghibli dojinshi - apaneseliterature.wordpress.com

Studio Ghibli dojinshi – japaneseliterature.wordpress.com

Professor Mori then shifted to another topic, that is the gender difference of expressions. In comics for girls (shōjo 少女), there is a complex frame. Thought bubbles are used more often, and characters look like fashion models. These features express rather feelings and topics like love, human relationships etc. Comics for boys (shōnen 少年) make more use of a flat frame and action sounds. Characters look like action stars, and therefore express motion. These manga contain themes like battle, sports etc.

Yaoi (love between men) dōjinshi mixes these things. They are written by and for girls, but are original inspired by comics for boys. According to professor Mori, yaoi indicates the spread of manga culture.


yaoi doujinshi of one piece – arigatomina.com

I conclude this post with reviewing the lecture “Business and Government Engagement with the Anime Boom in the United-States and its Decline” of professor Michal Daliot-Bul of the university of Haifa (Israel). Since the 1960, Japanese anime shows have become very successful around the world. However, it was only since the late 1990s, these shows were also labeled as “made-in Japan”. In 2000, we observed a peak in the anime bubble, but the boom is now over. It was clear that no recuperation of investments could be gained.

The globalization of anime did not work out so well because of structural obstacles. If we compare the Japanese and the American situation (Disney, Nickelodeon), we can see that in Japan there are no conglomerates who control the whole production and distribution process. The Japanese anime industry is decentralized, most companies are independent and small-scale, and the production process is fragmented.

The importance of merchandising - flowtv.org

The importance of merchandising – flowtv.org

The Japanese tend to orient their production domestically, and shun negotiations because of their fear to encounter language and culture barriers. In the beginning (and still), Japan sold their copyrights to the USA, making use of a minimum guarantee system. Once launched abroad, the Japanese had nothing to say about it anymore. Strategies for globalization are insufficiently developed: less than 10% of all revenues of anime are collected oversees. Take Pokémon for example. It became a world-wide success, but almost nothing of the revenues went back to Japan.

There are global distribution channels (e.g. Animax), but these are all launched in the USA. Online streaming is popular, but 1) hardcore fans prefer to pay a fair amount for their anime, 2) downloading is way easier. Television has obviously been replaced by the internet.



Could the Japanese government provide better support to the globalization of Japanese anime? Strategic plans for digitization have been made, but execution of them is not really visible. In 2013, the market has changed drastically compared to 10 years ago. The government hasn’t taken this chance into account, and has overlooked a big opportunity to control media-distribution. What is missing, is a flexible, agile and proactive approach to globalization.

Dramatic Economics

Japanese drama shows must get their inspiration from somewhere. Domestic economic scandals, for example.

1. Window dressing 

A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. To window dress, the fund manager will sell stocks with large losses and purchase high-flying stocks near the end of the quarter. These securities are then reported as part of the fund’s holdings. (Investopedia)

Drama case: Hanzawa Naoki



Hanzawa works at the Tokyo Chuo Bank as the head of the Loans Devisions, when he is forced by his manager to give an unsecured loan of 500 million yen to Nishi Osaka Steel. Because he is pressured to hand in the loan documents as soon as the following morning, there is no time to check the company’s accountancy carefully. Three months later, Nishi Osaka Steel goes bankrupt, and the  lent money is gone. The company had been hiding their debts with window dressing. The branch manager, who had promised to take responsibility before, puts now all the blame on Hanzawa.

Actual case: Olympus

On 8 November 2011, camera and copier maker Olympus corp. (オリンパス株式会社 Orinpasu Kabushikigaisha)  admitted having resorted to window dressing in the past. During the 1990s, at least $1.4 billion of losses were covered up using various types of window dressing. Surprising is that it took more than 20 years before it was discovered. In fact, it was brought into the light by a foreigner, the Briton Michael Woodford, who was sacked few days after becoming CEO of the company. Woodford had questioned the chairman about more than a billion dollars used as “advisory fees” to acquire some small-scale companies and firms. Advisory fees should be added up between 1% – and 2%  of the total deal. In the purchase of Gyrus, a British medical equipment firm, Olympus paid $687 million as advisory fees to unknown, firms Axes and Axam, situated on the Cayman Islands, what makes up for a third of the acquisition price. Apparently they used the fees to hide the long-standing losses of the past two centuries.

They didn't smile for long. - Telegraph.co.uk

They didn’t smile for long. – Telegraph.co.uk

Olympus’ scandal, though good for “the largest accounting fraud in Japan’s corporate history”, reminds us of the common accounting practice (tobashi 跳ばし) at the end of the bubble economy in 1990. Companies in debt transferred their bad assets or loans to dummy companies, so losses didn’t show up in the bookkeeping.

"Well yeah, we're kinda sorry for two decades of fraud..." The guardian.com

“Well yeah, we’re kinda sorry for two decades of fraud…” – theguardian.com

Interesting as well is the suggestion of newspaper Sankei that Olympus gave the yakuza, the Japanese mafia, some pocket-money, a tidy amount of $1.5 billion. Not much is written about that on the Internet, but I suspect it revolves around sōkaiya 総会屋, what means hiring yakuza to a) disrupt the shareholder meeting or b) prevent disruption of the shareholder meeting. Companies invite the yakuza to their own meetings for option b. For example, if a shareholder questions a certain policy of the company, he is threatened by the yakuza. Or they start making trouble in order to close the meeting and avoid further questions.

2. Insider Trading and Pump and Dump

Insider trading occurs when a trade has been influenced by the privileged possession of corporate information that has not yet been made public. Because the information is not available to other investors, a person using such knowledge is trying to gain an unfair advantage over the rest of the market. (Investopedia)

Pump and dump is a form of stock manipulation that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme “dump” their overvalued shares, the price falls and investors lose their money. Stocks that are the subject of pump and dump schemes are sometimes called “chop stocks”. (Wikipedia)

Drama case: Kurosagi



The swindler-who-swindles-other-swindlers Kurosaki poses as Yamashita, and tells Shiraishi, the swindler, that he wants to buy out Skybio Industry, a small company with a lot of potential. He asks Shiraishi to sell stocks in their new company. Shiraishi hears that a lot of great companies want to buy Skybio as well, so he sees an opportunity to con Yamashita. He suggests stock manipulation by insider trading. First, when Skybio enters the market, you have to buy as much stock as possible. Next, you spread the news about the purchase. Reputation of both companies will grow, and the stock value will increase. Then, you sell the stock you bought at a high profit range. If you have made a large sum of money, you spread the rumor that  the company is not to be sold. Stock prices will immediately drop, and you can buy shares again at a cheap price.

Actual case: Recruit

The Recruit scandal is connected with insider trading and corruption. It is quite famous because it forced a cabinet to resign. Hiromasa Ezoe, chairman of Recruit, offered stocks of the subsidiary Cosmos to many politicians before the company entered the public market. When it did in 1986, share prices skyrocketed and a lot of money disappeared in the pocket of Diet members. Two years later, about 47 politicians were found guilty of insider trading or receiving special favors, among them prime minister Takeshita Noboru and former PM Nakasone Yasuhiro. Not only did the cabinet resign, it was also the end of the LDP’s continuous reign since 1955, as Hosokawa Morihiro won the elections in 1993.



Facts for Fun

– If you are more fond of Korean drama, I can recommend Midas, a drama about money and how to earn it in a most effective (and most illegal) way.


– Wikipedia and Investopedia
Skinner, Douglas J. “Japan’s ‘Window Dressing’ Hid Olympus Fraud: Douglas J. Skinner.” Bloomberg, n.d. http://www.bloomberg.com/news/2011-12-01/japan-s-window-dressing-hid-olympus-fraud-commentary-by-douglas-skinner.html.
– “Camera-maker Olympus admits to window-dressing books.” Domain-b, n.d. http://www.domain-b.com/management/m_a/20111108_olympus_corp.html.
Facts and details
– Inagaki, Kana, and Phred Dvorak. “Olympus Admits to Hiding Losses.” Wall Street Journal, November 8, 2011, sec. Business. http://online.wsj.com/article/SB10001424052970204190704577024680506345936.html.
Miyazaki Manabu

Five Facts about Japanese Politics and Economics to Fill Awkward Silent Moments Spent in Company of Japan-Ignorant People

Today’s topic is, well, like the title tells you. Just five facts I think worth mentioning. I often start monologues on random Japanese topics, or add the suitable amount of information about Japan during small talk conversations with my friends. They are used to it. And most people even ask about it when they find out what kind of special/weird/extraordinary thing I’m studying. If you sympathize with my quirky behaviour, or you took the trouble to read this far and don’t want to give up now, here we go:

Fact number 1

The Emperor of Japan is the only monarch left in the world who is still called Emperor. Moreover, current Emperor Akihito is a descendent of Japan’s first Emperor Jinmu (660 BC). Akihito is the 125th Emperor. I mean, it all stayed in the same family! China for example, had several dynasties, which means that there were different ruling families. It is amazing the Japanese succeeded in maintaining the position of the Emperor for around 25 centuries (although that was no plain sailing). Controversy about the function of the Emperor reached a peak at the end of World War II, when Hirohito declared himself to be a human being and not an incarnate God. In the Kojiki 古事記 and Nihonshoki 日本書紀, Japan’s two oldest writings, is described how the Imperial family descended from Amaterasu, the Sun Goddess.

First Emperor Jinmu and current Emperor Akihito

First Emperor Jinmu and current Emperor Akihito

Fact number 2

The Constitution of Japan (1947) was originally written in English, and afterwards translated into Japanese. That’s because it was written by American people during the occupation. MacArthur’s SCAP team managed to fabricate the most fundamental law in less than a week. Special thanks go to Beate Sirota Gordon, who made gender equality legal. Today, it’s still the same Constitution. Especially article 9 is a “popular” topic for discussion. Additional fact: Japan has no army, but “Self-Defense Forces”.

Constitution_of_Japan_original_copyFact number 3

Japanese prime ministers are not boring. We think immediately of “Lion Heart” Koizumi Junichirō (aka the Japanese Richard Gere). But who I want to introduce is Asō Tarō, prime minister from 2008 to 2009. He profiled himself as a passionate manga fan (which gave him the nickname Rozen Asō, from the manga Rozen Maiden)  and wanted to use Japanese pop culture to improve international relationships. He received a lot of criticism because he mispronounced or read kanji incorrectly during his speeches. As result, he gained another nickname (how studying Japanese politics can be a lot of fun!): KY Asō. Here is some explanation needed. KY is the abbreviation of Kūki Yomenai 空気読めない or “someone who can’t read te air”, meaning someone who cannot understand the situation. In Asō’s case, KY stands for Kanji Yomenai 漢字読めない, or someone who can’t read kanji (Chinese characters). So dearest reader, if you do have some issues studying kanji, don’t worry, at least you can make it as a prime minister. Extra fact: Aso has made a comeback this year as Minister of Finance in Abe’s cabinet. As no reading mistakes are reported this far, I assume furigana (the pronunciation in phonetic writing system next to the kanji) was successfully added.

Barack_Obama_&_Taro_Aso_in_the_Oval_Office_2-24-09Fact number 4

– And I tell you this because of the huge difference with Belgium, it’s more like taking some extra day off here – to go on strike in Japan is not really to go on strike. May following quote makes it all clear to you.

”In Japan,” he said, ”we have what I suppose you Americans would call ‘job inactions.’ When we strike, we put on armbands to show we are unhappy and we go into the plant and work twice as hard as usual to prove to the bosses how valuable we are.” – New York Times 

Why? Because labor unions are integrated in the company. Apart from the wages, they do not have many things to protect, because the Japanese company structure is famous for its “lifetime employment”. Nevertheless, every spring there’s a kind of traditional labor union festival held, oh wait no, it’s a strike! Shuntō 春闘, the Spring Offensive for a higher wage originated in the 1940 and  concerned negotiations  between the enterprise unions and employers. However, it lost most of its initial meaning and has become more or less a tradition.

Fact number 5

In 1980, the land price of Japan used to be around 1600 trillion yen or 4 times that of the USA  (and Japan fit 25 times in the USA). Especially Tokyo was a little bit expensive. In the late ’80, only the inside area of the Japan Railway Yamanote Line in Tokyo was worth 400 trillion, what made up for… the whole area of USA. Sony bought Columbia Pictures of Hollywood, Mitsubishi owned the Rockefeller Center for 80 percent and the Japanese Royal Palace was as much worth as California. Needless to say the American felt slightly intimidated. Why the high prices? Until 1990, Japan had created a bubble economy. That means that real estate stock prices skyrocketed due to speculation.

Tuna Economics

Few days ago I came across this quote:

[…] Japan’s Kansai region consumers are much more “price elastic” to tuna sashimi than Tokyo region consumers […]

First of all, what is price elasticity?
formulapriceelasticity Or, in how far a change in price of a product does affect the consumer’s demand of that same product. If the demand’s increase or decrease is more than proportional (Ed > 1%), the product is price elastic. If less than proportional (Ed < 1 %), we get a price inelastic product.

In case of a price change of tuna, consumers in Osaka seem to react more strongly by buying more or less tuna than consumers in Tokyo. Why is that?

Bigeye_tuna_dishI had a hard time finding some information on this topic. It seemed that tuna is enjoyed all over the country (Japanese eat 80% of the caught quantity world-wide), but it is true that tuna consumption in the east and south is considerably higher than in the west. The variation lies in the tuna species. Different regions prefer different species, due to location and cultural preferences. The author of the quote probably meant “bigeye tuna” as fish demanded by Tokyo, and “yellowfin tuna” preferred by Osaka. The biggest deal of tuna is caught in the Pacific ocean, but to my surprise, Japan also does some fishing in the Atlantic and Indian ocean. As a result, merchants in Tokyo have easier access to all kinds of tuna (The Kanto region stands for 180% of the national average). On the West coast, mackerel and white-flesh fish are very popular.

For traditional sashimi (刺身) three kinds of tuna are used: bluefin, yellow fin and tuna. Tuna_sashimiRegional preferences include colour and fat, that’s to say, red and fat fish in Tokyo and pink-coloured and less oily species in Osaka. But, preferences started to change gradually since the ’80. Next to that, tuna consumption has generally dropped by approximately 10%, in parallel with a declining number of sushi restaurants. The reason is obvious: overfishing, fortified by a lax of quota’s.

I think we can conclude that tuna, or more specifically, big eye tuna has become more price elastic in Tokyo. This is normal, because traditional preferences change continuously in times where nationwide distribution is an easy matter. Although this post may seem a bit technical and complex, I think that it is still interesting to see how cultural preferences have influence on the economy.

Facts for Fun

– There are some funny differences in food culture. In Osaka for example, it is absolutely not done to dip your meat in the sauce container, as it is shared with the other diners. In Tokyo, everyone has his own container.

– On January 7, a 222kg bluefin tuna was sold for the highest price ever of 155 million yen at the Tsukiji fish market, Tokyo. That’s three times the record of last year.


– the quote and image of formula

-Tuna sites: Facts and Details, FAO, Globefish

– pictures from Wiki Commons