This year, the hottest stock market in the world is Japan's, which has been surging since the election of Abe. I've written about this before but there are messages from their grand experiment worth watching very closely. Sure, the central bank will be taking the Ben Bernanke approach but putting it in a gear that even the Federal Reserve would dare not attempt. But, I think most outside observers are missing the more important element to this latest attempt to awaken the Land of the Rising Sun from its two decade slumber.
I know the rest of the world would rather ignore nationalistic moves in Japan. But I think that Japan probably believes accepting a pacifist role made them weak as a country. Since WWII, Japan has mostly watched the rest of Asia come on like gangbusters. China is an economic powerhouse with dreams of being a military powerhouse. South Korea is a formidable economic rival and this week the world awaits the latest from Samsung ... when was the last time we waited for a new product from Sony?
Then there are the Asian Tigers, India, and other nations all coming into their own. In the meantime, young men in Japan have abandoned a desire for lifelong work and achievement and shun gyms for beauty salons. If Japan is to regain its former glory, it's going to take a lot more than just printing money, especially in a world where everyone is printing money. This is a message lost on America where the Fed's balance sheet has reached boundaries once thought impenetrable.
There has to be an organic movement with a unified focus on greatness.
In Japan, Prime Minister Shinzo Abe knows this, and he's been given a mandate by his citizens to make it happen. He has been given a mandate to unlock desire that has manifested itself in a powerful nation but seen ambition spin out of control in the most brutal forms of inhumanity. This is what Japan is dealing with now. It is ironic that the nation that has written off nuclear power after deciding the risks outweighed the rewards, but knew it could leave the island without enough energy to maintain some basic services, is now willing to fire up a different kind of dangerous engine. This is the engine of nationalism.
On Sunday Japan celebrated Sovereignty Recovery Day. It was the 61st anniversary of the nation regaining its sovereignty after its defeat in WWII. While the United States still maintains a military presence in Japan it was 61 years ago the nation was allowed to rule itself, but with a new constitution that muzzled any future military ambitions. It probably muzzled the "fight" in the nation as well.
Sure, there was that run that had America shaken about the prospect of becoming number two in the world but that ran out of steam and was the knockout as poor policies, ego and low desire to fight saw the nation simply put it in cruise control.
Of course when it comes to economies you can't put it in cruise control because your rivals are busy working hard and determined to take your place. This is exactly how Japan caught America in the first place. Back in the early 1970s nobody thought the land that sent us cheap transistor radios and Datsun automobiles would ever be a real competitor. So, if it is impossible to stay on top by mailing it in there certainly is no way to get back on top when the men in your nation would rather text each other all day than go to work.
American Nationalism
I happen to think nationalism can be a good thing even though it's not politically correct to say this in America. We equate nationalism to the Nazis and movements that ultimately saw the destruction of other peoples. In America it is safer to say you ware patriotic although even that word has come under attack in recent years.
In fact, for many the idea of loving your country too much is selfish.
We're being told to love the planet more than we love ourselves, to love poor nations more than we love ourselves, or we are as responsible for children born across town as our own. Of course all of those narratives are pretense that disguise power and money-grabs that otherwise defy common sense and self-preservation. We care about the planet, people in other nations and certainly our neighbors' children, yet when we talk about love of the flag or the national anthem of the United States of America the same forces suggest something sinister.
Here's how the anti-nationalism and anti-patriotism movement have been countered in recent years ... excerpt Robert Reich:
Negative nationalists prey most directly on people who are losing ground economically and socially. The recent resurgence of negative nationalism in Austria, France, and Switzerland is especially evident among blue-collar manufacturing workers and young men who feel the economic ground shifting from under them. The ugly violence against ethnic Chinese in Indonesia during the currency crisis there was also rooted in economic fears. People whose livelihoods are at risk find it reassuring to be given specific targets for their frustrations. Among economic insecurity's first scapegoats are always immigrants, foreigners, and ethnic minorities.
One thing is for sure, the nation is divided like no time I've seen in my lifetime and in need of something we can universally rally around. Once that thing was always the flag or Constitution but now I hear radio personalities deride that "two hundred year old piece of paper" as a relic. We are being told we have too many rights and it's time to trim them to size or eliminate them altogether. Whether you think it's patriotism or nationalism, there is no doubt the nation needs to think higher of itself - and then we will really care more about our neighbors.
Banzai!!!
You will not hear much about Sunday in the mainstream media or on financial news but it is bigger than money printing. During the ceremonies the national anthem "Kimigayo" was sang, ending with cheers of "Banzai" for Emperor Akihito. The anthem for Japan from 1868 to 1945 revered the imperial family and lauded Japanese pride. For the most part it had been forbidden since the end of WWII. There is no doubt Japan will move to remove the pacifist nature of its current constitution and begin to build its military.
It's not great news for its neighbors but I suspect will be great for the Japanese economy and more importantly rekindle a warrior spirit that's faded away over the last few decades. If the Japanese economy and stock market continue to rebound the simplistic answer will be money printing, but make no mistake there will be an answer more critical and one we need to observe very closely.
I think it could work and I think there could be positive lessons learned for America, which lately feels like the land of the setting sun.
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