Japanese Car Trouble
The past few weeks have not been easy for the Japanese.
First off, the nation’s largest company, Toyota, was forced to issue a recall for automobiles on three continents after it was revealed that the brake pedal on certain models had a tendency to “get stuck.” Consumers have become rather attached to the brake accessory on modern automobiles and didn’t take kindly to Toyota’s technical oversight. The company was forced to issue a worldwide public apology…then added that it will shut down five assembly plants in the US.
Then there was the somewhat embarrassing news – in the same industry, no less – that China has overtaken Japan as the world’s largest car manufacturer.
And, of course, there was that other stroke of bad fortune when ratings agency Standard & Poor’s threatened to downgrade the Japanese government’s credit rating, noting that Prime Minister Yukio Hatoyama is moving too slowly to reduce the nation’s soaring debt levels.
Bad luck in threes, you say? Hmm…
Your editor is gallivanting around Tokyo at present, enjoying the spoils of the deflationary spiral but ruing the stubbornly strong local currency. Prices continue falling…but the yen refuses to give an inch, even under threat of credit downgrades. Even so, a room that once went for ¥30,000 can now be had for a fraction of that amount. Restaurants and retailers engage in ruthless price wars in an attempt to stimulate demand from persistently frugal Japanese consumers. And, while Tokyo is by no means a “cheap” city to visit, it’s decidedly more affordable than it would have been back in the bubble years, before The Land of the Rising Sun underwent one of the most dramatic deflationary periods in modern economic history. Last year, while consumer prices among industrialized economies recovered about 1.3%, they fell almost 2% here in Japan.
But as Japan’s appetite slows, the rest of Asia grows ever hungrier. Along with South Korea, this tiny stretch of islands currently commands an inordinately large share of the world’s natural gas supply. Now, that trend is changing. As Chris Mayer observed in his essay “Liquid Natural Gas: The Next Resource Boom?” there are new players in the demand for this clean-burning fuel…and new ways to profit by investing in it…