Japan

Coincheck wreck

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Perhaps that was Coincheck’s greatest problem. Bragging rights to being the leading crypto exchange in Asia only made it (pardon the pun) a richer target. 58 billion yen ($560mn) was stolen. While bitcoin trading wasn’t halted many other cryptos were, exposing their fatal weakness. CM has been writing constantly that “hacking” was the biggest threat. Regulators will have to step in at some stage and the global trading element of crypto creates all the nasties of global policing against tax evasion and money laundering.

Coincheck claims it will compensate users of the exchange but at the same time is asking for financial support. The question is how the reactive forces within the Financial Services Agency will cope with protecting investors? Seems like cart before the horse.

Why should investors that willingly traded on an unregulated site be compensated?

Diversity in Japan

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Mizuho Bank was one of the first Japanese companies to openly embrace diversity and LGBT in a pride parade it promoted around 6 months ago . All the placards of ‘diversity is our strength’ and ‘inclusive society’ were displayed. The bank says it is the first in Japan to offer products which include housing loans that can be taken out jointly by same-sex partners, as well as principal guaranteed trust products — under which assets can be passed on to a same-sex partner.

According to an online survey by Dentsu in 2015, 7.6% of the population identified as LGBT. LGBT is not necessarily frowned upon at all. In fact many celebrities make a small fortune for being so. Matsuko Deluxe is a great example. She maintained her top spot in last year’s edition of the Nikkei Entertainment’s annual “Talent Power Ranking“.

For a culture that appears on the outside excessively conservative, variety shows embrace the very characters that shatter that myth. In such an orderly, consensus driven society their popularity stems from the fact they so brazenly buck the cultural stereotypes. After 20 years living here there would seem to be little evidence of blanket ‘discrimination’ against LGBT communities. Japan has existed more on a “don’t tell” mentality.

In the workplace more Japanese companies are embracing ‘nadeshiko’ to promote women. It was not uncommon to have a Japanese company look to marry off females to the legions of salarymen. So women were often overlooked for promotion for fear they’d raise kids and quit. While a terribly weak excuse to be sure one would hope that Japanese managers today  focus on hiring the best talent rather than hit predetermined gender quotas. There are plenty of talented Japanese women who can comfortably be selected on ability not gender. Although some will argue hard quotas will be needed so as to make companies feel comfortable they aren’t seen as ‘behind the times.’ Having said that government guidelines saw 90% of corporates adopt independent directors on their boards. Peer pressure seemingly works here.

However following ‘guidelines’ for the sake of it makes little sense. Were females more competent than the similarly ranked males on a 3:1 ratio in one company why not promote on that basis rather than a state suggested 2:1? If another company saw men 3:1 more skilled than women why wouldn’t a company want to rationally promote on those grounds? Indeed if companies look to succeed they should make decisions based on what is best for profitability and shareholders.

One corporate was asked this question of hiring more women at the AGM.  The CEO said he’d be only to glad to do so provided he could source suitable candidates. Hard to hit targets if the slew of applicants is 99% male. Indeed the company hires based on what it perceives as best fit for the business.

Things are changing in Japan on many fronts.

With marriage rates dwindling and childbirth nudging the 1mn mark per annum, more women are choosing to put the career first and have kids later and later.  Shotgun weddings now number 25% of all marriages and several companies are capitalizing on this trend by offering express matrimonial services. Society is changing. Note the report we wrote on the breakdown in the ‘nuclear family’ which tables in detail those seismic shifts.

Diversity in Japan. Far from wearing pussyhats and protesting with hostility there would seem to be many awaiting some centralized guidelines. While most would expect CM to tear strips off Mizuho for lining up for politicizing the workplace for once I’d credit it for “PROACTIVITY”. Indeed it wasn’t so long ago that then PM Koizumi had to tell corporate Japan that it was ok to take ties off in sweltering summer with power shortages in what was coined as “cool biz”.  Such a decision of common sense couldn’t be formulated by proactive management.

Mizuho’s credit doesn’t so much revolve around its appeals for more diversity rather for making a bold step to decide to do something like this without waiting for external guidance. With more internally driven open mindedness like this it paints a better role model for creating change.

This does not call for indoctrination of social ideals in the workplace. By all means provide hiring managers with better training on identifying talent but do not force identity politics in the office. Individual ability trumps identity every time.

So full marks to Mizuho. The message for Japan Inc to grasp from it is proactivity and common sense, not awaiting to be told what to do by some bureaucracy that is probably a worse offender of the guidelines it will inevitably seek to push.

Where money talks

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If there was one thing that could be transplanted into Japanese business culture it would be the Chinese practice of “there is a price for everything”. So often do we see sensible deals slip thru the cracks involving  Japanese corporates based on petty rigidities which serve no other purpose but to scuttle their own long term fortunes. Just 6 hours in HK and already it smells of business opportunity. Clear skies too.

It’s ok if Eddie Murphy does it

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Such is the double standards of the media these days. The amount of drivel that has been spewed over Japanese comedian Hamada’s skit which had him role play Axel Foley (Eddie Murphy) in Beverley Hills Cop. “Racist” is the most used word against Hamada but how many forget the accolades Eddie Murphy received playing multiple roles in the film Coming to America including that of a white Jewish man? Not a peep.

One can call Hamada’s humour as “insensitive” but get a grip. Japanese humour is what it is. Not many foreigners get it. Most of it is hitting soft hammers on the heads of celebrities and gags such as being shoved in a bag full of cockroaches to humiliate the star. I doubt that Hamada had the slightest intention to create a race based attempt at belittling blacks.

As for the Eddie Murphy skit it is unlikely that many Japanese would get the correlation of a Detroit Lions jacket and Axel Foley without the make up addition.

Still even Aussie kids can get vilified for dressing up as their favourite AFL stars like Nic Naitanui who just happen to be ‘coloured’. No bigger sign of praise to the player than to want to be as authentic as possible right down to skin colour. It isn’t shaming. It’s praising. Indeed skin colour is irrelevant to a player but a 9yo kid just sees an idol rather than identity politics. Yet the left think the bigger lesson is not to get kids to be dreamers and aspire to role models but smack them and their parents over the head for being bigots.

Poor comedy would be a bigger crime than poor taste in Hamada’s case.  I’m sure the Japanese won’t lose a wink over it as political correctness thankfully doesn’t exist there. Talk about cultural insensitivity- to understand Japan would be a first step before the social justice warriors went to war

2018 – no more space for multiple ‘elephants’ in the room

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The Contrarian Marketplace wishes everyone a Happy New Year and prosperous 2018.

As oft the case people are busy making new year’s resolutions. CM mission doesn’t change. It aims to further energize the spirit of enquiry. To be the maverick voice that will not be silenced. We live in a world where we need to become comfortable being uncomfortable. We can no longer hide behind group think Because we feel it is dangerous to challenge consensus views. CM won’t buckle to identity politics, victimhood or social justice.

However that will never exclude us from criticism and we welcome feedback to improve the offering. We will not take The Guardian approach of refusing to acknowledge the content might be the problem when appealing for readers to ‘donate’. CM is self funded. It will remain so because it never wishes to be beholden to others to peddle tailored messages to keep the lights on.  If CM doesn’t survive on its own merits then it dies through market forces.

In 2017, Brandon Tatum showed what impact a Tucson, Arizona police officer can have on today’s media. His videos have gone viral (50mn+ views) on topics from the NFL, BLM to anti-Trump protests. He is now working for the Conservative Tribune such has been his impact. He speaks in cold hard truths. One doesn’t have to agree with what he says but he makes compelling arguments. No accolades from the journalist associations to self congratulate. As we used to say at high school sports competitions- “look at the scoreboard.”

CM started two years ago to challenge conventional thinking on all manner of topics.  It was born out of a growing realization that the mainstream media on both sides of the fence was too biased. Investigative journalism has all but disappeared, replaced with clickbait headlines and little more than biased piffle for what can only loosely be described as content. It seems that journalists are paid on the number of shares or likes rather than the quality of input.  As Ariana Huffington once said, “I’ve long said that those of us in the media have provided too many autopsies of what went wrong and not enough biopsies.”

2017 has been a continuation of the ridiculous pandering to political correctness and our lawmakers seem even more determined to avoid censure from social media, somehow thinking it speaks for the majority. Gender neutral toilets, removing statues and same-sex marriage take priority to the oncoming fiscal/monetary train wreck and a fracturing geopolitical landscape. It is almost as if our elected leaders have the blinkers on.

2018 is shaping up to be one that our political class is ill prepared for. Out of one’s depth is not a harsh enough criticism. Too many governments (including conservatives) are running up the national credit card trying to bribe bewildered constituents into tolerating more of their nonsense. However at some point, appeasement will not work because government’s can’t economically afford it.

Silent voices are increasingly pushing back. Traditional parties are seeing their constituents abandoning them. Australia’s conservative Liberal Party is Exhibit A. It is no longer a party true to its core. After the Turnbull coup it has taken its constituents for mugs but they have left in droves. While the Libs champion superior leadership, how is it One Nation has taken a huge bite out of it’s support base? It doesn’t add up and its this sense of denial that guarantees they’ll be destroyed at the next election.

Look at the growth in nationalist parties in Austria, France, The Netherlands, Germany, Italy and even America. While they may not have outright majorities in every case the reality is that all of these parties surged in the most recent elections. Mainstream parties can mark it down as a one-off or ‘they’ll be back’ mentality but this time is different. Take Trump. His GOP hate him almost as much as the Democrats. While the mainstream media ties itself into knots over the relevance of well done steak and tomato ketchup to running a country or the fact he paid millions in tax, his brand of political incorrectness is refreshing.

Sure his words are vulgar at times and Obama knocks the sports off him for eloquence or as a nice guy but we are in a world of ruthless people. The geopolitical landscape is rapidly changing. The last US administration allowed a free-for-all for nations such as China and Russia to roam free on the global landscape. Russia’s actions in the Ukraine, Syria and Iran or China building man made military bases in contested Asia-Pac waters have filled a vacuum vacated by the US. We should be glad that we have a Trump who is putting his foot down that things have changed.

While Trump’s use of ‘Rocketman’ to describe North Korea’s leader may seem juvenile, China hasn’t fully worked him out. They stroked his ego by allowing him to be the first President to dine in the Forbidden City after his rhetoric saying that if they don’t deal with Kim he will. The resumption of Chinese oil trading with North Korea in full defiance of UN sanctions tells two things. China thinks the UN is a waste of space and it is testing Trump’s resolve to carry out his threats to take care of business with minor provocations. China’s military is nowhere a match for the US so this could backfire badly if they miscalculate. This will escalate again in 2018.

Don’t rule out India’s growing frustrations with China. China’s built a naval port in Sri Lanka’s Hambantota. Recently the Maldives signed a FTA with China which should be ringing alarm bells in Delhi. For the last decade, China has been strengthening its armed (ground and air) forces to India’s north too, including the funding of the upgrade of the 1300km construction of the Karakoram Highway (aka China-Pakistan Friendship Highway). It is no surprise that Russia has been replaced by the US and UK as preferred arms suppliers to India.

As written several days ago, the Middle East seems to be an unstable powder keg. The way the stars are aligning with respects to the death of the former Yemeni President Saleh, the cleaning of the House of Saud, the repudiation of Qatar by the Gulf states and ructions in Iran point to something larger to kick off. Do not be surprised to see Israel and Hezbollah clash again in 2018. It won’t be an Arab Spring. Afterall this is more a shift toward a more direct clash between Sunni and Shia, not just played through proxy wars in Yemen, Syria or Lebanon. One can’t sink Saudi and Emirati naval vessels off Yemen’s coast with Iranian Revolutionary Guard support indefinitely.

These geopolitical problems will only put pressure on global markets which are already overstretched asset bubbles in almost every form – equities, bonds and housing. The realisation that unfunded pensions are likely to wipe out the retirements plans of millions causing even more pressure on economic growth. There is no escaping the fact that the can has been kicked down the road for too long. Whether 2018 is the precise year it unfolds is still a moot point but we are moving ever closer to the impending financial collapse which will be uglier than 1929.

Central banks have no plausible ammunition left to play with. Bloated balance sheets filled with mislabeled toxic assets (liabilities). Record low interest rates offer next to no policy flexibility and tapped out consumers face oblivion if asset prices keel over. A systemic banking collapse is absolutely plausible. No amount of QE will work this time.

Yes, it would be nice to see 2018 trump 2017 for good news (it wouldn’t be hard) but sadly the punch bowl at the party is empty and the hangover won’t be pleasant. No amount of painkillers will let one avoid a throbbing headache which will last a very long time.

Forewarned is forearmed.

Japan healthcare ain’t so great as Occupy Dummycrats would have you believe

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Japan’s healthcare system may seem great optically but it is heading for a crisis. Looking through the MHLW’s White Paper it is plain that the economic burden with an aging population is surging. Someone aged 65yo+ costs 12x what a 20yo costs in medical bills. By 2035 40% of Japan’s population will be aged over 65. Current medical costs total 41 trillion yen. Japan raises 97 trillion in revenue. 58% of that is tax. 40 trillion is raised in debt markets to fill the hole. EVERY YEAR.

80% of hospitals and clinics are private so it’s ridiculous to say 95% are not for profit. The current billing system encourages hospitals to keep patients in because they can charge for it. Hospitals don’t want it changed. Hospital clinics serve as gathering places for old people causing needless cost on a shrinking pool of taxpayers.

The MHLW admitted that around 40% of costs are labour related (doctors, nurses) around 25% on building maintenance, 15% on equipment and 10% on utilities. The only place they can conceivably cut is drugs where the push to genetics has been a factor.

Yes Japan’s healthcare system works for now but it can’t be sustained as it is without wholesale change. With a shrinking tax pool and aging population the dam will burst. Note the Ministry of Justice has had to ask for 6bn in extra funding for increased medical costs for an aging population inside its prisons where 65yo+ are the highest demographic.

Liberals are rarely good with numbers.

Lies, more lies and statistics

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So the global trends in motorcycles apply in Australia too. Older riders make up a larger proportion of motorcycle license holders. 50% are aged over 50 according to the NSW Centre for Road Safety. Having said that the total number of licensed riders in NSW rose 44% to 600,633 in the last decade. Motorcycle registrations have jumped from 108,656 to 218,055 in the last decade.

As is often the case, the government in its infinite wisdom hasn’t a clue about statistics. The NSW Roads Ministry has said fatal accidents are up 54% and 80% for those over 50yo. However registrations are up 100%.

According to its own stats in 2016 there were 375 fatalities on NSW roads. Bikers were 63, down from 67 the previous year. So if we back calculate to a decade ago to the 54% jump they claim there were 40 deaths on bikes. Not great but for 110,000 extra registrations there was a fall in the ratio of deaths per 100,000 riders. 54% gives them the right to call for more speed cameras and regulations which don’t help

In 2004 as part of a statistics course for a masters degree our team investigated speeding and the inaccuracy of government reporting. When the double demerits scheme was introduced fatalities went up. When 40km/h school zones were introduced fatalities went up. Speed doesn’t kill  living in fear of your speedo which causes you to look ahead less often does

While not suggesting trying to cut road fatalities is a bad thing the government should be more honest with the stats. The biggest issue for motorcycle crashes is the speed limit itself. Given the police hand out fines for minor speed infractions bikers are forced to ride in car blind spots massively ramping their risks of being hit by a mobile phone gazing driver. All the arguments for too much horsepower etc is also rubbish given the amazing advancements in safety aids on bikes.