Japanese opportunity!

A great deal of investors tend to confine their understanding of the world to the balance of their invested capital. If the  markets are going up and their stocks are moving along, they believe that the economy is roaming and that the policies in place are working. They often ignore the underlying " fundamentals" of a particular economy or Nation. The case for Japan is one to analyze. The Japanese economy has been on a "downhill spiral"  since its heydays in the 80s after their stock market crashed and a long crisis followed. Yet, despite all that deflationary depression" as quoted by no other than the great Bernankster, Japan has remained the world 2nd largest economy and one of the most innovative and productive Nation in the world.

 While the US is extremely rich and military powerful, its ghettos are some of the most violent and dangerous places in the world! American jails are filled with young men and women who have been arrested and locked up for " ridiculous crimes" while the wall street elite is running away, undisturbed, with the Nation wealth. Japan in contrast is one of the most stable, and conservative society in the world. The crime rate is extremely low, people are healthier than in most places, and they also tend to live quite longer. Despite the crash of the stock market in the 80s, Japan has remained one of the world most innovative markets, especially in the field of high tech and manufacturing! What comes to mind is that investors have lost a lot of money on Japanese equities, consequently, Japan has been branded a " no-fly zone" by the money men on wall street! If it is bad for them, it has to be bad for everybody right!

"I doubt it every time I turn on my PlayStation 3!"

The recent quake and Tsunami in Japan has caused a great deal of human, economic, and social lost. But, the Japanese have inhabited that Island for thousands of years, and have still managed to make it a pretty decent place to live and prosper despite its natural calamities. While investors and money men are worried about the decline of the Nikkei and the cost of reconstruction,  I think that the recent quake can be an opportunity for the Japanese people to rediscover their " Samurai spirit" and rise to the challenge of time.

I am not saying anything new here but we all know that Japans has a lot of demographic and fiscal imbalances. Thousands of people are reported dead or lost while the internal debt isn't going anywhere soon!

What if the Japanese, given the constrains they are dealing with decide to " restructure" their fiscal policies by reducing government interferences, lowering taxes, and reducing social benefits? The quake was in some way a final blow to a Nation sliding downhill into insolvency! The Japanese government has mismanaged the country's economy for far too long and this should be an opportunity for a new era in that country!

As they have done many other times when they were being challenged by outside forces; whether be they the fleets of Kublai Khan or the American invasion, the Japanese have always find a way to turn the stride of time to their own benefit and grow stronger out of crisis.

The current crisis in Japan might spark a new awakening after 20 years of stagnation! Maybe a new generation of Japanese entrepreneurs and leaders can rise up and rid the society of the overly deferential and obedient attitude permeating in that society and engage into bold endeavors aimed at reviving the Japanese brand while also re-invigorating the passive and defeated attitude of the younger generations. The Japanese leadership has been too incompetent before the crisis and will not change it good old ways. The country needs the rise of a new breed of " Samurais-entrepreneurs", steeped in traditions but also willing to take more risk while giving individualism some room as well.

Does that means that we all need a quake and billions of dollars worth of destruction to awaken? Certainly not! But like many time in the past, when faced with extreme challenge and near annihilation, the Japaneses have grown out of their problems and branded their Nation into one of the most admired and respected.

Why wouldn't that happen once again this time? 

By the way, a reinvigorated Japanese economy and society will certainly do wonders for the Nikkei; and that will certainly appeal to the investors class!