Economics

Japan after 2014 elections

Albert Zenkoff

The exit polls at the House of Representatives elections held in Japan on December 14, 2014 indicate that Shinzo Abe’s Liberal Democratic Party is set to “win by a landslide”, according to BBC. In reality, the apathy of the public has won Shinzo Abe a carte blanche to do with the Japanese economy as he wishes.

The government said turnout was at just 35%, two hours before polls closed. This election had the worst voter turnout under the current constitution ever. The day after elections all sources quote not the government but the Kyodo news agency that guesstimated the vote turnout at 52.7%. Saves the face of the government, I guess. It would have been hard to cite overwhelming popular support with just one third of the population voting.

The election was rigged as an approval referendum for the economic policies of Abe and this point was completely missed by the general public. They probably also missed the point that Abe will be in the office for four years instead of remaining two. WSJ reports that the public was generally confused regarding the purpose of the snap election and no wonder.

Despite all, the election is literally trumpeted as …
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Will Sony Corporation be up for grabs soon?

Albert Zenkoff

Did you notice a recurring theme in corporate takeovers these years? Now we see at Sony Corporation what we saw not so long ago at Nokia. The company received a new top management team that cut all investment into the advanced research and development of new products. The company sells a lot of its assets bringing the value of the company down and the resulting cash is quickly used up. Then, more cuts are executed among product development teams, causing the company to stall and fall behind the competition. The company then suffers a few bad publicity events, causing the share price to drop and leaving the company strapped for cash in the wake of damage compensation payouts. The company is up for grabs and we finally learn who planned and executed the hostile takeover.

The scenario worked well on the mobile phones icon Nokia and may soon play out on the consumer electronics icon Sony.

It was on November 25 that Sony Pictures hacking first emerged. On November 29, copies of Sony’s unreleased movies Annie and The Interview appeared on some sites. Last week, salaries of some executives were revealed, followed by personal data of other employees. Some …
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Japanese “new economy” fails … because of rain!

Albert Zenkoff

Sometimes it is just hard to believe news. Reuters reports that the Japanese government seriously blames the weather for the failing economy. To this, the only response I have is “you must be joking”. But, no, they are serious. The Economics Minister Akira Amari announced that “heavy rain has probably pushed the GDP down by 1.6 percentage points on an annualised basis in July-September“.

What kind of economy is it that can lose 1.6% because of rain? Mind you, the rain happens every year in Japan, it’s sub-tropical. Anyway, this only looks like a feeble “it’s not my fault” outcry from a naughty child. Instead of accepting the fact that the “abenomics” is destroying the economy and causing the country to fail, it is, of course, much easier to blame the weather for the absence of the much touted economic growth due to the so-called “stimulation”.

The article notes that “some economists worry that declines in real wages are the bigger factor behind weak consumption” and I am glad to see that at least some see the situation for what it is. Next, we will see failing consumer confidence and after that – the government will …
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The story of economic sanctions as told by PMI

Albert Zenkoff

While the world is watching the civil war in Ukraine the European economics is sliding into oblivion. The Manufacturing PMI tells a story that should scare the hell out of the politicians of EU – so bad the business dynamics in manufacturing looks.

In August, out of 26 countries, only 9 reported improvement in the index, 15 recorded a slowdown in the two countries has not changed. In fairness it should be noted that 21 countries report PMI is still above the level of 50 points, and below only 5. But it is not so important, because the dynamics is still downward. There are those who are moving in the right direction: in Greece and Turkey business activity index in August was able to finally overcome the mark of 50 points. The rest of Europe presents a serious reason for concern, whether peripheral or central: everywhere there are signs of a serious recession.

United States, on the other hand, sports the best activity indicator in the world. PMI index has reached its highest level since April 2010 and reached 57.9 points. In case of U.S., the export orders component grew at the fastest pace in three years, and the employment …
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Externalities are crucial for the software industry

Albert Zenkoff

Externalities exist in any business. We are very familiar by now with the externalities of the manufacturing industries – air and water pollution, noise pollution, depletion of resources etc. But what about the software industry? How bad is the industry’s addiction to the externalities?

In economics, an externality is a cost or benefit which affects a party who did not choose to incur that cost or benefit.[1]

For example, manufacturing activities which cause air pollution impose health and clean-up costs on the whole society, while the neighbors of an individual who chooses to fire-proof his home may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if he were required to pay all associated environmental costs. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. For the purposes of these statements, overall cost and benefit to society is defined as the sum of the imputed

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Microsoft strategy success: Nokia no more

Albert Zenkoff

Now it should be painfully obvious to everyone that the long-term strategic plan of Microsoft to bring down and absorb Nokia worked. Many years of hard work by high-profile managers and large investments are finally set to bring home profit for Microsoft.

Now that Nokia is bought by Microsoft, Microsoft can finally make the mobile devices that are, well, mobile devices. They will have the technology, the market, and the people. Unfortunately, they still have to make it all work. They still may run this very successful business of Nokia into the ground. And there is a high chance they will.

There was a time when I was wondering if it was just a Microsoft venture, or a joint venture by Microsoft and Samsung. Actually, no, I would not go as far as to say it is all clear now. We will see how things pan out.

The hole in the market remains though and the market share of Nokia is still up to grabs. The biggest problem is really the patent pool. This is the time when you wish there were no such things as patents. The market could flood with new and exciting mobile phones now if …
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Strategic direction: security ebb

Albert Zenkoff 1 Comment

Something quite prominent happened in the security field over the last week. It is a strategic move so I am going to talk about it here rather than on Holy Hash! although it would be interesting to the security folks too.

So, what happened, you ask? Ah, nothing so spectacular that TV shows would interrupt their evening program for but so momentous that I wish they would. It all started with the little exercise at RSA Conference where a couple of so-called “security leaders” declared that security is the territory of really large companies and anyone smaller should just forget about it. I already wrote my opinion about the basic idea of ignoring risks in an area where an incident, according to Coverity, runs on average to 7 million dollars but can easily be a couple of orders of magnitude more.

It would all go away into the history unnoticed if it was not for Bruce Schneier who suddenly chipped in with his commentary that he agrees to the gentlemen in question. Now, Bruce is not stoopid and he is the head of security for BT. To explain to our full satisfaction how come that his …
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Chinese can!

Albert Zenkoff

Reuters is amazing me today. Another short article gives a quick update on the Chinese affairs in Africa. Chinese were copying small stuff from everywhere until now: products, technologies, machines, tools. Now they are copying the big politics and economic strategies. US has used this strategy successfully for a long time in South America, Europe, Asia and Middle East, enslaving multiple countries with horrendous amounts of debt. Now China is copying their approach in Africa. There is a lot of agricultural land in Africa and securing access to this land in the long term is a very wise decision. Not that it is going to do any good for the others but for China it is definitely a very good move.

Update: another good article from much later: http://permaculturenews.org/2013/09/18/the-global-land-rush/

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Greece and … IMF?

Albert Zenkoff
Graffiti on the wall in Athens says "I.M.F. GET OUT"

A very interesting thing has caught my eye in the photographs from the recent riots in Athens, Greece.

If you look at the pictures, it very definitely says “I.M.F. GET OUT“. Why would demonstrators talk of IMF in Greece? Would it be possible that Greece bought into one of those IMF backed plans? If so, it would be interesting to learn a bit more about what economic development “plan” was sold to Greece. It is also quite interesting to see that Reuters does not mention IMF in their articles on Greece for some reason. Did they not see their own pictures?

Eurozone troubles drove U.S. treasury debt prices higher as investors fled to havens including gold and the dollar.

Seek the one who benefits, right?

Did you see how much Euro went down recently? Do you think it is normal? Do you think if Greece went bankrupt it would really mean something apocalyptic for the Euro-zone? No, really? How much of the all-European economy is in Greece? Come on, be realistic, Greece is too small for the kind of impact pictured in those articles. But panic! yes, panic can hurt Euro-zone, oh, yes… I have seen …
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EU economic growth

Albert Zenkoff

The data for the economic growth in EU is here: Eurostat Report. It is in German but you understand the numbers. It seems that Northern Europe and Eastern Europe are pretty much all right and at least until the second wave of the “financial crisis” comes should be well on their way to the new boom. It is interesting to see the comparisons between various countries and how the growth is distributed in Europe. Begs the question of “who supplies who with what?”…
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