Japan to Business: Ignore the Lack of Customers

Mike Shedlock | Jul 21, 2013

If you are looking for idiotic policies in action, the theories of Japanese Prime Minister Shinzo Abe should be right in your spotlight. Abe now tells Japanese firms "Stop Sitting on Cash"

“Okuma, a Japanese machine-tool maker, has seen its stock price rise around 30% this year. Its customers have outdated machinery that needs replacing. But, for now, the company isn't investing. Instead, it is sitting on a pile of cash worth about $280 million—50% higher than its pile a decade ago, equivalent to one-fifth its annual sales, and more than twice the level required for the firm to be deemed loan-worthy by a bank.

Why? Senior director Chikashi Horie says the answer is simple. Okuma's clients "are not investing, not even to raise efficiency, so we are not investing either," he says.

Okuma's thinking embodies one of the key challenges for Prime Minister Shinzo Abe's ambitious growth plan: persuading Japan's famously stingy companies to stop stashing their earnings in the bank, and putting the money to more productive use, helping complete—rather than short-circuit—the virtuous economic cycle.”

Blatantly Obvious Idiocy! What is with these central planning fools anyway? Not only do they think they know better than the free markets, they want companies to produce what their customers clearly do not want.....Here's a simple question: What happens to prices when more products are produced in the face of falling or static demand?...ToRead More...

My Take – For those of you who haven’t read much about what should have been a small downturn in the economy in 1929 and how it turned into a great depression you should be aware that this was the same idiotic thinking Herbert Hoover delivered to America’s employers. He reasoned that if you don’t lay people off they will be buying....in spite of the fact that wasn’t happening and didn’t happen. The consequences? A whole bunch of companies went out of business and layoffs were the least of everyone’s problems. In order to clear the record.....Herbert Hoover wasn’t a Laissez Faire president; he was a central planner, and although FDR ran against Hoover’s policies after he was elected he merely “out Hoovered” Hoover and he Great Depression lasted until 1942. Also...one more point. The common thinking is that WWII brought America out of the Depression. Wrong....it merely delivered full employment. The Depression ended because after the war two things happened. Truman abandoned a bunch of anti-business central planning nonsense and regulations and America had the only industrial base left in the world.