auspol

Yemen – Saleh’s death is the dangerous slice in the Iran & Saudi sandwich

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Even before the Arab Spring, CM (in a previous life) wrote that Yemen was a trouble spot. It’s former President Ali Abdullah Saleh (Sunni) has died of natural causes – he was assassinated in a spate of tribal violence in the capital Sana’a yesterday. No stranger to being an oppressive tyrant during his rule, after being ousted in the Arab Spring he was in recent years working with the Houthi tribe (Shi’ite) to regain power before switching back to a US backed Saudi-friendly deal maker. He proved that power is more important than religious sect. However the Houthi weren’t prepared to suffer a turncoat who betrayed them so Saleh was duly dealt with.

Why is Saleh’s death important? What it now does is give Saudi Arabia more will to take more decisive action against the Iran backed Houthi. It is no surprise that Saudi Arabia has cleaned house with the arrests of  royal family members to tighten the inner circle. It smells like the early stages of broader tit-for-tat skirmishes before all out conflict ensues. Yemen is often argued as a proxy war between the two.

While many are distracted by the US Embassy to Jerusalem as an unnecessary ‘in-the-face” action, it is a very firm line in the sand to where the US cards already lie. No big surprises. For now most Gulf States want Israel on their side to help them defend against and ultimately defeat Iran.

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At the narrow Bab al-Mandeb Strait separating Yemen and Djibouti/Eritrea, cargo ships make their way up the Red Sea to the Suez Canal, could become a major choke point. This year multiple US, Saudi and Emirati warships have been attacked by Houthi rebel forces. In January 2017 a  Saudi al-Madinah frigate was sunk in the strait. An Emirati HSV-2 swift naval craft was also put out of action in late 2015.

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Safe access to the strait is crucial at present because of Egypt’s reliance on imported LNG to maintain stable electricity supply. One LNG tanker heads to Egypt each weeknight through the canal. Just under 10% of global trade goes through it as well. Any blockage or restricted access would force ships to sail the long way around the Horn of Africa adding another 40% to the journey. This would have significant impacts on shipping and trade. Markets aren’t factoring anything at this stage.

The problem with naval conflict is that Yemen is backed by Iran which in turn is one of Russia’s best clients. Iran possesses the SS-N-22 Sunburn missile which is a supersonic anti-ship missile which even the US has no answer for. In recent years this has been upgraded to the Super Sunburn (P-270) which is even more lethal. It is a ramjet which travels at Mach-3 meaning if fired inside a 100km range then the target is likely to be toast (video here). It can be launched from a ship, submarine or land.

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Iran could blame a whole host of tribes (Sunni or Shia) sick of being under the jackboot of effective Saudi control/influence for an attack.

On December 2, Israeli jets bombed an Iranian military weapons base in Syria. Israel has warned Iran it won’t tolerate any military presence on Syrian soil. We shouldn’t forget that China has also deployed its special forces to Syria to help Assad. Clearly the Chinese see a good opportunity to clean up some of the spoils in the region. China is always happy to help out nations that are under sanction. It adds more mess into the geopolitical sphere.

While the GCC has stepped up its air attacks on Yemen post the death of Saleh, he was the only one that has been able to unite the country. Indeed it is possible that the secession of the south becomes an issue. At the time of reunification of North and South Yemen in 1990 many in the south felt their northern neighbors were pillaging too much of their oil reserve wealth. Even their private land was appropriated and spread among the Sana’a elite. Now that Saleh has gone, and Yemen fragmented again, we may see old scores settled. The Southern Movement (loyal to exiled President Hadi) in Yemen wants to take back what was stolen from them. So Saleh’s death may open a vacuum of more instability.

Iran would relish the opportunity of a fractured Yemen to further build its influence. Bab al-Mandeb may become a flashpoint to fight the proxy war. It is extremely messy, creates proper disruption and pushes Saudi Arabia and Iran closer to conflict.

Which ever way you cut it, diplomacy in the Middle East (what little there is) looks set to worsen. In a sense we are dealing with two large clients of Russia (Iran) and America (SA). Now China is siding with Russian interests by using it as a test run of its military muscle. China isn’t committing anything major but it wants to be at the negotiating table when it all goes pear shaped.

It smells very similar to the lead up to the Arab Spring. More turmoil and complacent markets which are not quite absorbing the realities of “local problems” spreading to another neighborhood. Sure we’ve seen many leaders overthrown in Libya, Tunisia, Egypt and so on in the last uprising but the pressure on Saudi is mounting hence the recent crackdown internally.

The other dark horse is Erdogan in Turkey. He is facing a corruption probe over money laundering to help Iran evade sanctions and he seems keen to externalise his problems so he can shut down the local threat. He is threatening to cut off ties with Israel if the US relocates the embassy but for a man with clear ambitions to revive the Ottoman Empire that fell less than 100 years ago that is a mere formality in the future.

The flashpoint remains Yemen. It has the perfect storm of a pawn in a global game of chess. While it whiffs of local tribes seeking revenge there are too many willing to help them achieve their aims which only plays to the broader ructions throughout the rest of the Middle East. Last week Houthi rebels launched a missile attack against the UAE nuclear power plant under construction. Power corrupts. Absolute power corrupts absolutely

Well done Senator Leyonhjelm for inviting Milo to Parliament

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Full marks to Senator David Leyonhjelm for inviting Milo Yiannopolous to Parliament House. Despite the Greens Party leader Senator Richard Di Natale doing his best to ban him as a hate preacher, bigot, racist etc etc Milo had a pretty full audience. It is not whether one agrees with what he says but it is important to let any ideas out in the marketplace of free speech and debate the issues rather than shut them down. Indeed one would hope that Di Natale has such a strong case he could pin the Armani suited Milo’s arguments in person. That’s the thing. If Di Natale is convincing enough people will back his views on the sheer weight of  merit.

As an Australian citizen (even from afar) I watch the painful political correctness in the West that seems to turn a blind eye to almost anything that even remotely runs up against an identikit. We mustn’t offend this group or that group.

To be honest, as an example our government, in its quest to prevent on the fringe Islamophobia actually creates the environment for a worse time for Muslims. The majority of Muslims probably don’t care if we celebrate Christmas with trees in Martin Place but our political class decide to strip the tree of its significance in order to pander to something that just isn’t relevant. “Merry Christmas” is replaced with “Seasons Greetings.” In turn, some think that Muslims are behind it which means governments push for “hate speech laws” to cover up for their own stupidity and short-sightedness. Celebrate Australian traditions. Just like Aborigines seeking umbrage over statues of Cook and Phillip – the overwhelming majority don’t care but our politicians are all too busy trying to cater to another minority whose arguments and grievances are usually trivial to say the least.

Even the lunatic torch and swastika flag bearers in Charlottesville should be able to protest. Sunlight (torchlight) is the best disinfectant. Let these people go on parade for all to see. One can see for themselves they have no platform. The KKK (the former militia of the Democratic Party) has dwindled from 4mn members to less than 6,000. Out of a population of 330mn people they represent less than 0.02% of the population.

Probably some of the best footage of ‘like minds thanks to open platforms’ came when a BLM protest was given time on a stage at a Trump supporters event. BLM were told you’ve got several minutes and if you don’t like it then tough!

Still some in the political class feel the need to introduce all manner of laws to cover up their own weakness. At least some voices in parliament are not afraid to speak out and defend free speech. So credit to Senator Leyonhjelm for encouraging Milo to talk to our lawmakers.

It is not whether one thinks Milo is palatable (although a sellout tour in Australia is indicative) it is that he has a view. We don’t have to agree with it but again the left who try to shut him down will find far more backers of their cause if they combat him with concise and constructive arguments based on facts and truths. Said with authority and authenticity and watchMilo’s support wane. Indeed shutting him down actually helps Milo sell more tickets so it ends up being an own goal.

It really makes me want to join the political class in Australia to shore up the tide that is flowing toward feeble policy, further inaction and muzzling what they’re too gutless to admit. I want peace and harmony as much as the next person but it doesn’t come about by silencing dissenting voices. Embracing those voices is a tenet of democracy. Perhaps if the country was being run competently then people like Milo would be a footnote rather than front page.

ABC gives yet more reasons to be defunded

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The Australian Broadcasting Corporation (ABC) has a charter to be politically unbiased. The public knows it is unashamedly partisan. Yet its overseers (aka the Government) still give funding north of $1bn to the state owned media group without calling it up for what it gets away with. What it passes for ‘free speech’ usually ends up in the climate change, asylum seekers or any other social justice cause it feels strongly about. Yet the charter is not supposed to act as a platform for disgruntled public servants to broadcast their own views on the taxpayer’s purse. The latest saga is the ABC’s JJJ station which broadcasts alternative music. It has decided it won’t be playing the Hottest 100 Countdown on Australia Day because of its political views that it is in reality ‘invasion day.’ There is no problem for each and everyone of those JJJ employees who thinks of Australia Day that way to believe that. It is another to provide a tax payer funded platform to express it.

To put it in perspective, given several Victorian local councils decided several months ago not to host naturalisation ceremonies on Australia Day, one would hope that JJJ has just woken up from the marijuana smoke haze in the studio to realize this fact. Otherwise, why has it taken them so long? Surely if the producers  were savvy enough at JJJ they could have announced their political stunt the week all of the social justice governments were announcing it.

However it is a serious issue. Why is there a need for four taxpayer funded stations in Melbourne? It is a similar story in the other states. The original purpose of the ABC was to fill in for a lack of a commercial alternative, especially for those in the countryside. Now we can all choose to stream Australian radio stations while we’re in Berlin or Caracas if we feel like it. When you look through the stats, JJJ key demographic is 25-39yo but across all time segments except ‘Afternoon’ it struggles for better than 5%. ABC Melbourne caters to pensioners. Is there a need to provide the infrastructure to supply four stations. Surely the rational argument is that a similar number of bodies must be employed to fill the same roles – the producer, technician, the script writer, the news gatherer….even the guard at the front door. Run many of these stations on commercial terms and most wouldn’t pay the cost of operating.

If one believes we must have a public broadcaster then the number of stations should be cut to one, not four. If the private sector can’t see a ‘commercial’ justification for filling the gap it would leave then it is odds on that advertisers aren’t prepared to either. On the flip side if the ABC radio presenters are desired by particular audiences then the private stations will gladly snap them up.

This is not to undermine the efforts of some quarters of the ABC. Some documentaries such as ‘The Killing Season’ or Foreign Correspondent’s expose of the Fukushima reactor were extremely well done. However it is the fact that some in the ABC think they have a right to dispense the billion plus funding on their own political and social causes. Yet who can blame them when the former Communications Minister (now the Prime Minister) is desperate to avoid courting negative media coverage? When a conservative (by name plate) PM is afraid to go on private radio stations with conservative audiences you know this problem of bias at the ABC won’t be going away for a long time, especially after the drubbing the conservatives will get at the coming election.

With a $500bn and rising debt in Australia, we can ill afford frivolous public spending, especially on broadcasting where the ABC ignores its charter so brazenly. We can chose to listen to left leaning or conservative radio stations in the commercial space. We can consume on line any form of media we choose from around the globe. With media now so ubiquitous, what is the ABC offering that is remotely ‘differentiated’ to warrant its existence? None that can be seen.

If everything is so great then why is our political scene so broken?

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Queensland’s state election said it all. Both the incumbent parties lost massively even though the incumbent Labor Party looks like holding on to power. While Pauline Hanson’s One Nation party looks like it fared poorly in terms of seats it still got 13.8% of the vote from 1% in 2015. Forget the headline results but think of what the political turmoil In local, state and federal levels is telling us more broadly.

Think logically about it all. If the economy is booming, jobs are abundant and prosperity is on the march then there is little need for governments to be running deep deficits let alone facing hung parliaments and acts of desperation. Surely the incumbent governments of the day can laud their own achievements and their constituents would happily keep returning the status quo. The majority should continue to be happy. More by rights should be winners in such a world of record housing prices, steady wage growth, low unemployment and 25 years of economic growth as experienced in Australia.

Yet PM Turnbull turned on many of the traditional supporters of the conservative wing of his Liberal National Party (LNP) coalition who turned their back on him to hand Labor the victory in Queensland. Not so fast Prime Minister. They didn’t leave the party. The party under your incompetent stewardship left them. At all levels the LNP is divided. There are some quarters suggesting that the Nats may split from the Coalition in the next election in Queensland to leave the stench of the Liberal Party to themselves. This is when personal ambition trumps wish to serve a nation.

While the LNP was handed the most valuable and recent lesson of the disaster that was the Rudd-Gillard-Rudd internal factional knifing during their time in power, it completely buried its judgement and started following a left leaning press, weak poll numbers and copied Labor’s folly. Now we have a hung parliament (not withstanding the dual citizenship fiasco) with chronically weak and misguided leadership. One that tells voters that they have no clue rather than introspection that the party may indeed be the problem.

It used to be said that Australia enjoyed the most stable politics in the Asia Pacific region. That encouraged foreign investment and gave Australia low interest rates, a superior credit rating and a regulatory platform that ensured trust (important for corporations), the envy of many nations. Yet inside a decade we have had 5 (soon to be 6) prime ministers which has thrown that ‘reputation’ in the toilet. In a world where international capital is more mobile than ever and asset prices are peaking, instability in government eventually carries severe financial market penalties.

For Aussie banks, levered up to the gills with inflated mortgage books on their balance sheets, such things have negative implications for the 40% reliance on global wholesale credit markets to fund themselves in the face of a tightening US interest rate cycle. Do not underestimate the negative connotations of a federal government that has lost its way, no matter which major party is in power. Where the average Aussie can’t bear anymore on the mortgage, a third admitting they can’t pay the home loan if they lose their job for 3 months or more. Almost 1,000,000 Aussie households would be in severe mortgage stress if rates moved 150bps(1.5%). Think of the spill-over effects on consumption which would only lead to a recession and lay offs, exacerbating a cycle, all the while bashing the currency making international funding even more biting. If only we had a stable government that had a decent fiscal position to weather that storm. Oh, that is right we squandered that in 2008.

One Nation in Australia, AfD in Germany, Party for Freedom in The Netherlands, Front National in France, 5 -Star Movement in Italy, Fidesz in Hungary, FPO in Austria, the Sweden Democrats, Vlaams Belang in Belgium,  Progress Party in Norway, Trump, Brexit…these patterns aren’t random. It isn’t just populism but protest votes to establishment parties that aren’t delivering. While we are constantly told how great our lot is, sadly the gap between haves and have nots is widening globally. Politicians who are ditching political correctness and making waves on publicly uncomfortable issues are thriving. Why could that be?

Donkey (informal) votes in Australia have seen numbers soar from 2.2% in the 1950s to over 5.0% in the 2016 election. Some electorates in NSW saw as high as 14% informal votes. These are powerful messages in a country that has compulsory voting, which has slid to 90.9%.

The sad reality is that the electorate is making louder noises every election that things are not pointing in the right direction yet the muppets are still being returned to their box seats on a dwindling majority. Why? Because not enough voters are heeding the warning signs that are sounding in front of them. Of course politicians still continue to sell comforting lies backed by ever more unaffordable promises to keep themselves in power for as long as possible when we all need to be facing the unpleasant truths that will happen whether we like it or not.

Indeed those deplorables who voted One Nation might have spurned the LNP but not without good reason. In time, they will be viewed as the wiser ones. Not because they necessarily believe in Pauline Hanson’s platform but because they believe in Turnbull and Shorten’s even less. It all rings like a Premier League football coach making a litany of excuses for his team’s woeful performance that ignores the fact that the collection of individuals have absolutely no cohesion as a team. All the fans can do is bury their heads in their hands until the point they can’t bear to watch another game until the coach is sacked.

Houston we have a housing problem

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Yes, Australian banks are the most levered to the Home mortgage market. Over 61%. Daylight comes second followed by Norway and Canada. US banks are half the Aussies. Of course any snapshot will tell us that prices are supported by immigration and a robust economy. However when Aussie banks are c.40% exposed to wholesale markets for credit (Japanese banks are around 95% funded by domestic depositors) any turn around in global interest rates means Aussie banks will pay more and eventually be forced to pass it on to tapped out borrowers. The Reserve Bank of Australia kept interest rates flat while tacitly admitting its stuck

A study back in March showed that in Western Australia almost 50% of people with a home loan would be in stress/severe stress if rates jumped 3%. Victoria 42% and bubbly NSW at 38%. I can’t remember bubble Japan property (as dizzy as it got) experienced such stress. A recent ME Bank survey in Australia found only 46 per cent of households were able to save each month. Just 32 per cent could raise $3000 in an emergency and 50 per cent aren’t confident of meeting their obligations if unemployed for three months.

The Weekend AFR reported that according to Digital Finance Analytics, “ there are around 650,000 households in Australia experiencing some form of mortgage stress. If rates were to rise 150 basis points the number of Australians in mortgage stress would rise to approximately 930,000 and if rates rose 300 basis points the number would rise to 1.1 million – or more than a third of all mortgages. A 300 basis point rise would take the cash rate to 4.5 per cent, still lower than the 4.75 per cent for most of 2011.”

The problem for Aussie banks is having so many mortgage loans on their books backed against lofty housing prices means that we could face a situation of zombie lending. The risk is that once the banks mark-to-market the real value of one house that is foreclosed upon the rest of the portfolio then starts to look shady and all of a sudden the loss ratios blow out to unsustainable levels. So for all the negative news flow the banks cop for laying off staff while making billions, note net interest margins continue to fall and when confidence falls out of the housing market, the wholesale finance market will require sizable jumps in risk premiums to compensate. Indulge yourself with the chart pack from the RBA on pages 29 & 30 where net margins are 50% lower than they were in 2000, profitability under pressure, non performing loans starting to rise back toward post GFC levels…call me pessimistic but housing prices to income is at 13x now vs only 7x when GFC bit, how is that safety net working for you?

Some may mock, but there is every chance we see a semi or total nationalization of the Aussie banks at some point in the future. Nobody will love the smell of napalm in the morning but then again when the Vic government is handing out interest free loans to the value of 25% of the house price for first home buyers you know you’re at the wrong point in the cycle. Maybe TARP is just short for tarpaulin.

Crime in Japan – Breakdown of the Nuclear Family

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CM – Crime in Japan – Breakdown of the Nuclear Family

Following on from pensioner crime in Japan, this eye-opening report on the breakdown of traditional families points to a future unlike what many may not fathom. The link above contains the full report with a short summary can be found below.

Did you know that 25% of all marriages in Japan are couples that marry due to unplanned pregnancies? In Okinawa that rate is 42.4% Did you also know that 25% of all households with children in Japan are single-parent? The perception of the dutiful wife getting up at 4am to make breakfast for her samurai salaryman husband are virtually non-existent and half of divorces happen in age groups 55 years old and above. 25% of divorces occur in the 65yo+ cohort. The government changed the law in 2007 entitling wives to up to half of their ex-husband’s pension. Still the trend was rising sharply even before its introduction. Mrs Watanabe has had enough of her salaryman and wants out.

Domestic violence (DV) is seeing a very sharp upturn in Japan. Between 2010 and 2014, victims of DV have soared 60.6% against women and 650.1% against men. Most cases (over 60%) of DV were marital related. Recognizing the growing problem, The police have even developed a new category of DV which defines a divorced couple who are living under the same roof. Economic conditions for some families has become so tight that the stress of living with someone they do not want to be with now gets its own category, scoring over 6,000 cases alone in 2014.

Between 2010 and 2014, total reported stalking cases surged 36.6% to 24,837. 50% of stalking incidents recorded were related to partners (including former partners).

The Ministry for Health, Labor & Welfare (MHLW) has 208 child consultation centres which fielded over 88,000 cases in 2014, a 20.5%YoY increase or 22x the level of 20 years ago. Despite a 2.4x jump in social workers inside these child consultation centres over the last two decades they can’t keep up with the demand. The Japan National Police Agency (JNPA) statistics show a sharp jump in arrests for child abuse, 80% being due to physical violence causing injury. In 2013, 36 abused children died with 16 of them under 1 year old. Police note that child abuse is being driven by the breakdown in traditional family, unemployment and poverty, stats which we showed earlier to be rising steadily.

Crime in Japan is a problem that will not simply disappear with the evolving mix of aging demographics, poverty, unemployment, underemployment and economic stagnation. We note that the previous jump in Japanese crime started in 1997 and ran to a peak in 2003. Unemployment was a factor. In the crime boom of 2010-2016, we note that the unemployment rate has fallen but it masks disturbing trends in lower paid part-time work which is putting families under financial stress.

There is the smell of fear in the workplace. In the period 2002 to 2013, labour disputes almost trebled. Bullying and harassment (which are obviously less palatable for companies to have floating in the public domain) as a percent of total disputes has ballooned from 5.8% to almost 20% over the same period.

Another dilemma in the data is the employment referrals by government unemployment agencies for middle or advanced aged staff (45yo+) which shows that around 25% of them end up with work in a fixed term capacity of more than 4 months.

Ironically active retraining of inmates to help them find new careers after release occurs in prison. Why isn’t more being spent on finding ways to redeploy those out of prison? The idea that any job will do is a recipe for failure and cannot be relied upon as a sustainable program. Most vocational training by Hello Work, the government unemployment insurance agency, is broad and non-specific. Any specific job training will be ‘paid for’ which ultimately is limited to an unemployed person’s financial status and confidence a job will be attainable at the end of it.

Crime in Japan – Geriatric Jailbirds

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CM – Crime in Japan – Geriatric Jailbirds

I have been asked by several people to rehash a report I wrote on elderly crime in Japan back in Feb 2016. The above link contains the entire report. Below is a brief summary.

While retirement for many of us is some way into the future, common sense would dictate that once we reach it, committing crime is probably furthest from our minds. Hugging one’s grandchildren is surely a better option than talking to them through a glass window. If you are in prison you are supposed to be old when you leave not when you enter it. Not so in Japan.

The incidence of crime committed by the elderly is soaring. 35% of all arrests for shop-lifting involve the retiree demographic, up from 20% (2001). Since 2001, their representative percentage of the prison population has doubled and 40% of repeat offenders among the elderly have committed crimes six times or more in order to return as a guest of His Excellency. While much of it is petty crime, there seems a deliberate attempt to ‘break into prison’ as a way to survive. A roof over their head, three square meals a day, no utility bills and unlimited free health care. The only real negative being the harsh prison rules about when one can talk to fellow inmates. To the state, one inmate costs ¥3.8mn to incarcerate and we estimate around ¥300,000 in court and administration fees per incarceration. Furthermore supplemental healthcare to the prison system has doubled in the last 7 years. We study the economics of what might drive someone to make the choice to commit crime and look at the government’s current funding for income support. Is it being spent wisely?

Such has been the overpopulation in prisons, the government has had to increase capacity by 50% in the last decade and boost the incidence of early release and parole to create space for what one can only guess is a way of developing state sponsored retirement villages. Female prisons are already full but the MoJ wants to increase the number of female prison guards to prepare for the anticipated increase in elderly crime.

At the last (average) count in 2010, there were 4,069 elderly inmates. While that is only 14 people per 100,000 aged over 65 that rate has been climbing from 12 in 2004 and around 8 in 2000. We estimate at the 5.4% compound growth rates experienced to date, that 31 people per 100,000 is possible by 2036. At that rate, 11,636 elderly citizens would be in jail at a cost to the government of ¥42bn per annum as health cost related budgets have been appropriated at around ¥120,000 per elderly inmate.

‘Supplemental welfare’ or income support paid by the Japanese government is approximately ¥3.6 trillion per annum and spread across 5.9mn people (an average of ¥605,000 per person). ¥1.7 trillion of that total is for medical and nursing care (c.¥1.2mn per person). Note this portion of healthcare is separate from the ¥36 trillion annual healthcare budget.

What are the economic sums that drive a pensioner to consider committing crime? We surmise that a measly base pension of ¥780,000 (US$7,000) per annum won’t get one very far. When throwing on top of that healthcare, rent, utilities and food it is not hard to get someone into net-negative income territory. Sure, supplemental income through part time work may close the gap but perhaps that some are resigned to their fate to consider jail as an option.

There is another elephant in the room. Suicides among pensioners are now 40% of the total, up from 27% in 1983. One gets the feeling that all of the things that retirees had come to expect from a society is in reality against their long-entrenched cultural thinking. Wives of retirees now make up 6% of all reported suicides. They are obviously not adjusting to having the bread winner at home every day. We break down suicides by prefecture and show the clear link to elderly populations, low population growth and relatively smaller GDP compared to national averages. The economic malaise in the regions contradicts a vibrant Tokyo and much of what is going on does not get reported. Domestic violence committed by the elderly has surged 2.4x in the last 5 years. The number of murders committed are even higher.

Solutions are hard to fathom. By 2060, 40% of the population will be above 65 years of age. Would Japan be better off building large scale dormitories that would include medical facilities in return for pension sacrifice? This way these pensioners could trade off prison life for state sponsored shelters at one would expect a fraction of the cost of adding to prison population. Surely if the government met potential pickpocketing pensioners half way then it would be preferable to both parties on cost and shame grounds. Would a Benesse (9783) be interested in running a public-private initiative (PPI) to help the government build such centres given they are already investing in old age care facilities? Benesse wants to expand its elderly care business to 20% of the group total by 2020. The government has taken this approach of PPI with building day-care centres as JP Holdings (2749) has benefitted greatly from. The government needs to think of how to revitalise the regional areas. With slowing economic growth, working age employees flock to the cities where jobs are more likely. It exacerbates the pressure on the regions to survive and poses longer term risks for the companies in the region to sustain employment. PPI projects in the regions makes sense from a variety of perspectives which we discuss might alleviate the pressure