Tuesday, May 24, 2011

Shabu shabu in Japan's maddening recession



PART 1

In Tokyo for a few days before returning to Manila, I had a shabu-shabu dinner with a fund manager friend visiting Tokyo from London last night. He used to live in Tokyo but he'd moved back to London a few months ago to join a hedge fund in Mayfair that was fortunately doing very well.

"So how's the Japanese economy doing?" This was the first question I asked him. He'd just spent a week going around Japan meeting lots of blue-chip companies and rising stars, including automobile industry-related businesses in Nagoya. I ask this question of all my visiting fund manager friends as I'm seriously interested in what the professionals -- meaning the people who are paid hefty sums to actually go around town talking to other people-in-the-know about the economy -- are hearing and thinking about this pretty taxing economic mess Japan has not been able to dig itself out of for years.

"Pretty positive, actually," he replied. "I'm quite surprised at how quickly some companies are rebounding. One company I spoke with today thinks it'll be back to normal by September."

Hopefully, that's true. Looking around this city I used to live in, however, it's hard to think that a rebound is in the making. Shops and restaurants everywhere are closed, and there's an air of inactivity all around. Department stores are empty, and everything looks even more depressing because half the lights have been turned off to save energy. No one's spending money because they're scared about not having any left tomorrow. The only places doing brisk business are discount shops like Don Quixote, 110 yen stores like Daiso, cheap fastfoods and bargain bin retailers.

THE RECESSION-PROOF PEOPLE

Of course, just like everywhere else, there is a certain sector in Tokyo that's just recession-proof -- meaning they continue to live well in spite of everything. For this small group of people, life's normal, if not great. Prices are dropping, after all, so there's lots of things to be had cheap if you have the money. I was just at the Tokyo American Club for lunch today, for instance, and the cars lined up in the parking lot, belonging to expatriates and very wealthy Japanese, were all recent and top-of-the-line expensive models. It was like a fancy car showroom. For the average Tanaka-san, however, life in Japan is steadily deteriorating, and I just can't understand why it's so difficult for the Japanese government to get their act together and fix their economy.

A MESS WAITING TO BE CLEARED UP

It may not be fair, but I'm pretty hard on Japan and its government regarding the faltering economy -- considering I've seen it sputter and start and then sputter again in a maddening cycle for almost two decades now. I've always maintained that it's inexcusable that a rich country like Japan, with a very educated workforce, lots of money in the bank, no racial or religious issues, and no external problems like wars or terrorists, has not managed to get its economy back on track over a span of two decades. The only pressing problem on Japan's agenda is to get its economy going again, and it has not managed to do that.

TOKYO'S DEAD TIRED AFTER 20 YEARS

Today, after 20 years of a recession, Japan is a pretty tired country with a pretty tired population. So many store spaces are empty and recently vacated expat homes in pricey neighborhoods remain unrented because so many foreigners have left Japan. Too few jobs, too few opportunities, and pretty prohibitive taxes. It's certainly a nice place to visit; but if I was an entrepreneur with a lot of energy and ambition, I'd be living elsewhere -- somewhere where people are more inspired to create things and live their dreams, somewhere where the barrier to entry is not so impossibly high. Like Manila.

LONDON'S GETTING BACK ON TRACK

Then we started talking about London. In contrast, London had a bit of a bleak period recently but apparently it's now getting back on track. Property prices are at record highs and the expensive restaurants are all full. According to him, the Chinese are buying homes at the lower end (and by lower end, I'm talking about a million dollars at least), while the Indians are buying up the middle categories (US$5 million and so) and the Russians are buying everything at the top. The Russian zillionaire Roman Abramovich just bought another whole block of buildings in Knightsbridge, he says.

A couple of years back, I was in London and the talk of the town was the purchase then of a beautiful home in Kensington Palace Gardens by the Indian steel tycoon Lakshmi Mittal. At that time, it was the most expensive purchase of a house in London. I don't blame him for paying top pound for that property, however. Kensington Palace Gardens -- where our own Philippine government used to maintain a villa (although I think it was a rental) and so our ambassadors to the Court of St James once lived in a splendid area -- is just about the best place to live in London.

I've been fortunate to have been invited by a couple of our ambassadors to visit them at their Kensington Palace Gardens official residence, during my visits to London. This former official residence of the Philippine government was really impressive so I always liked taking along a friend or two from London to accompany me to dinner just to show them this beautiful villa in one of the city's best addresses.

Kensington Palace Gardens also has the added cachet of being opposite Kensington Palace, home of the late Princess Diana and many of the royals. There are a set number of villas on this road and they're few and not being built again. So the premium on a villa on this street is so worth it, if you can afford it. Yes, it's my dream neighborhood. I would live on this very street as well, if I had the money to burn. Lakshmi Mittal reportedly paid close to 50 million pounds at that time.


Compared to crazy prices in London, where what's considered a fortune in our part of the world will just about pay for a garage in Kensington, Tokyo property prices look very cheap -- and they're just getting cheaper. Prices continue to spiral downwards so that a house on the market two years ago is now probably 20% cheaper today -- even in the best neighborhoods in Tokyo.

Up next...the Tokyo earthquake
and waitresses serving shabu-shabu with no underpants


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