Subject:	Japanese Federal Government Spends 1/42 Of What We Spend On Y2K
Date:	1999/06/14
Author:	fedinfo <fedinfo@halifax.com>
	Posting History

Our approximate Federal government Y2k budget is $7 BILLION . Guess what it is in Japan?     "Government budget for Y2K preparation totals 19.3 billion yen ($163 million). "   In other words we are spending 42 times what they are  FORTY TWO times as much.   You don't see a MAJOR problem here? I mean, even at the very worst, you don't think they should be spending  a QUARTER or even one TENTH what we are?   But no. You are completely mollified to hear that they are spending a little more than TWO CENTS for evey dollar that we are spending.   Technologically they are no Namibia. Their government is one of the most technologically dependent in the world. And they are spending TWO cents for evry dollar that we spend.   If you do not understand that Japan is toast by now, you are not going to make it.     http://infoseek.go.com/Content?arn=a2255LBY595reulb- 19990613&qt=y2k&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486 -- Paul Milne If you live within five miles of a 7-11, you're toast. Sent via Deja.com http://www.deja.com/ Share what you know. Learn what you don't.

-- a (a@a.a), June 14, 1999

Answers

Japan will be sushi on toast.

-- Randolph (dinosaur@williams-net.com), June 14, 1999.

You post good stuff Paul and I read most of it. But, am getting a little tired of the "But no. You are completely mollified to hear..." type stuff. The only non-serious people here are the trolls. Serious to perhaps a 7 is maybe all that's doable for us city folk. Doesn't mean stupid. Chill a little.

-- Carlos (riffraff1@cybertime.net), June 15, 1999.

Yes Paul, I am quite satisfied with what the Japanese Federal Goverment is spending.

1)Computers did not become an important part of life until around the time of Windows 95. They rely far more on commercial programs than mainframes which take special coding. Patches will play a much bigger part in Japan.

2)Your total lack of understanding of the Japanese culture shows through. Obviouslly the concept of the "salaryman" in Japan totally alludes you. Try reading the book "Salryman In Japan" available at amazon.com http://www.amazon.com/exec/obidos/ASIN/4533006655/qid%3D929426127/002- 5632376-4791237

There is NOTHING greater in Japan than "the group". The group can be anything from your family, your part of the company, the company as a whole or the nation as a whole. You sacrafice "for the group" without concern as to your well being. It borders on Communisim in a Capatilist society. The Japanese also do not tend to come up with "phantom charges" in their budgets. What they report really is what they need. They will skip going home at night if there is work that needs to be done. As usual, applying American thoughts to the Japanese is like trying to fit a cube in a round hole.

Go ahead Paul, continue talking about something you understand zero about. You know, just like you do with computers.

-- They May Suffer, But... (japan@isnot.toast), June 15, 1999.

Sounds like you got what you know about Japan from a book, huh?

-- Gordon (gpconnolly@aol.com), June 15, 1999.

Perhaps they are using heavy talent. (Retired sumo wrestlers?)

Seriously, you make a good point, Paul. It is a concern to many of us. And if their own systems don't get them, the oil situtation will.

-- Mad Monk (madmonk@hawaiian.net), June 15, 1999.

"Sounds like you got what you know about Japan from a book, huh? "

Nope. My knowledge comes from working with the Japanese every day for many years now. The book however is very well written and is about the closest anyone who does not work with them can get to even having an inkling into their mindset. (a friend gave me a copy for some unknown reason, not sure why they thought I needed, but oh well)

-- They May Suffer, But... (japan@isnot.toast), June 15, 1999.

A small fact has been omitted from this discussion. Japan's total federal budget is smaller than America's [700b vs 1700b], so they are actually spending about 1/20 of the US.

Of course this is still a large discrepancy.

-- Robert Egan (rjegan@juno.com), June 15, 1999.

So, in relative terms, Japan is spending 5% of what we are on federal Y2K projects. They are pretty efficient, so maybe it's effectively more than that.

Of course, we also have to keep in mind that our government doesn't appear to be close to being finished, on even its "mission critical" systems.

Japan is totally dependent on imports for energy. Banks are the lifeblood of their economy.

I guess I would be surprised if the Japanese population is 50% of its current size by the end of next year.

-- Dog Gone (layinglow@rollover.now), June 15, 1999.

Dog Gone makes a valid point in his prediction of lost population. I haven't been in Tokyo since '75. It was extremely overpopulated then. It must appear like a mound of ants today, I'm sure. This is a country of islands. Very limited "real-estate". How long and *how* will Japan's agricultural community be providing for this level of citizenry?

-- Will continue (farming@home.com), June 15, 1999.

Even if Japan was 100% ready, which obviously they are not and cannot become, the reliance on imported energy cannot be overemphasized. Japan has to import it all.

Two things have to work in order for Japan to survive. The importers have to get it there. Japanese banks have to make payments for it.

Neither seems very likely. The suffering in Japan may be the worst in the entire world next year.

-- Dog Gone (layinglow@rollover.now), June 15, 1999.

STRATFOR Commentary: Japan's Illusory Recover

The news that Japan's economy grew last quarter has been taken in some places to mean that the Asian economic crisis is now over. This is a completely inappropriate interpretation, save in one sense. The Asian economic crisis is over in that it is no longer a crisis. A crisis exists when a sudden, wrenching event shifts the fabric of history in unexpected and dangerous ways. Once that fabric has shifted and once history has adjusted to the new reality, there is no crisis. It is at this point a secular redefinition of relationships, a secular shift. The Asian crisis has now become a permanent feature of the global, historical landscape.

Japan's recovery must be seen cyclically. Nothing moves in a straight line. Economies caught in secular upsurges inevitably experience secular downturns. That is what happened to the U.S. economy in 1990-1992. A basic, secular upturn that began in 1982 remained in place, but cyclical readjustments, conditioned by the capital markets and demand structures, compelled a downturn in the upswing. So, too, in Japan the secular downshift that began in 1990 remains in place. Inevitably, upturns will take place. These must not be confused with recovery in the sense of a new secular shift taking place.

The upturn in Japan's economy had to do, in part, with the extent to which the economy had fallen. Taken as a whole, the economy had entered an over-sold position, in which the goods it manufactured were undervalued and insufficiently in demand. As in the stock market, buying opportunities (or selling opportunities, depending on how you look at it) presented themselves. Japanese firms, in dire straits, were able to make attractive deals, particularly to foreign buyers, designed to generate cash flow. Many of these deals were at or even below break even points. Thus, the improved numbers that indicated gross economic activity cover up an underlying depletion of Japan's capital structure.

This can be seen in the ongoing capital shortage in Japan. According to Bank of Japan figures published in this week's Barron's, capital continues to contract at about 5 percent. The contraction of credit into an economic upturn is an extremely ominous sign. It indicates that the economic activity taking place is not providing sufficient rates of return on capital to increase the capital pool. In other words, it means that the recovery represents sectoral opportunities based on price differentials in the world market rather than what is supposed to happen in a recession: enforced economic efficiencies leading to improved rates of return on capital.

In a real sense, the Japanese rebound increases the sense of foreboding that we should have about Japan. The rebound is long overdue. When it came, it was so fundamentally unhealthy that it hurt, rather than helped, Japan's long- term recovery. It also poses extremely severe problems for Japan's political and social system. There is a simple question: how much longer can Japan's political system continue to endure the pressures created by Japan's economic failure before entering its own wrenching crisis? Official unemployment now stands at about 4.8 percent. That is almost certainly an undercount but even at that level it towers over historical unemployment figures. The impact of unemployment on the political process of any country is unsettling. In Japan, where a job defines self- identity as well as income and where unemployment was virtually non-existent until recently, the political multiplier effects will be enormous. Indeed, the longer the political system manages to contain the pressures, the greater the social impact will be.

In our view, Japan's economic problems cannot be solved by economic policy. They are rooted in the very fabric of the Japanese socio-economic system. A debt driven system, dependent on bank debt rather than on equity owned by investors, cannot provide the long term capital sensitivity that is absolutely necessary. So long as Japanese firms turn first to keiretsu-linked banks that make loans based on social kinship and are interested only in the repayment of the loans, rather than on rates of return on equity, Japan will not recover. Of course, to reach that point, Japan would have to experience a social revolution of monumental proportions.

That will not happen. We must always remember that Japan is the only major industrial power never to have experienced a social revolution. Its social system remains feudal at root, with adjustments for merit. But the meritocracy is tempered by the stable social relations that are required for a social system to operate. As a result, the kind of dramatic shifts required to solve Japan's problems are not going to happen.

Japan has no experience with social revolution. It does have a long tradition of political instability. The period from 1970 until today should not be taken as the Japanese standard. Pre and post-World War II Japan both experienced massive political turbulence in the face of relative social harmony. That paradox, strange to the Western mind, simply means that the elite fragments and struggles among itself, but the underlying system of social relations is not challenged.

We are beginning to see the very earliest beginnings of that shift. The key symbolic issue will be foreign policy. Japan's renunciation of war was, ultimately, imposed by a foreign invader. In due course, the influence of that invader will be thrown off and the invader himself will be held responsible for Japan's problems. Such an explanation will permit political upheaval without requiring a massive social redefinition. So, this week, voting is taking place about legally making the Japanese Rising Sun flag the national flag. The Democratic Party is calling for shifts in the constitution and so on. None of these are very serious, yet. But they will be.

The news from Japan this week is bad. The increase in economic activity, which should be a cause for celebration, is in fact nothing more than a meaningless uptick in an otherwise degenerating system. The kinds of changes required demand a social revolution. Japan will have no social revolution. Therefore, the ongoing stress of the system will generate tremendous pressures on the Japanese political system. These will symbolically focus on Japanese foreign policy. But the real issue will be this: who will preside over Japan's political solution to its economic problems, and what will that political solution look like?

-- a (a@a.a), June 15, 1999.

a:

I like the free E-mail alerts from stratfor.com because the writers are very thoughtful in their analyses. Weeks ago they were writing about Russia aligning with China, and current events seem to support their predictions.

-- Randolph (dinosaur@williams-net.com), June 15, 1999.

The amount being spent is meaningful only relative to the size of the task to be done. Not relative to nothing (Milne), and not relative to the annual budget (Egan). Without any knowledge of the Japanese exposure to y2k bugs, the remediation budget all by itself tells us nothing useful. Not that Milne needs useful information to draw conclusions, of course.

-- Flint (flintc@mindspring.com), June 15, 1999.

I notice that once again 'a' requests that everyone's responses bounce. I guess clicking on check boxes is beyond the dedicated cross- poster.

-- Flint (flintc@mindspring.com), June 15, 1999.