Rent me

The Asahi Shimbun ran an article about a 62-year-old widow who abandoned her house in Saitama prefecture, where she and her late husband raised two children, and moved to a smaller house in Fukushima prefecture that her husband bought just before he died. The house has a garden and the woman says she is quite comfortable. The thing is, she did not sell her Saitama house. This unusual arrangement is made possible for a new sort of organization that helps older people “change homes.” Read More

Portrait of stagnation

The government’s household spending survey for 2008 was released the other day. The average balance of savings for each household was ¥16.8 million, a 2.3% decrease from 2007 and the third year the average balance has gone down. The main reason for the decline was, again, lower interest rates as well as fewer people taking out life insurance annuities. The portion of savings devoted to stocks and securities was about ¥2.7 million per household, which is a slight increase over 2007, and the fifth year in a row that showed an increase. Average total debt per household was ¥4.98 million, a 1.4% decrease, meaning fewer families are borrowing money.

No down redux

Back on Mar. 15, we posted an entry about the government’s new Flat 35 plan to stimulate property sales. The main new feature of the plan is that people who want to buy homes can borrow 100% of the money needed, meaning that they don’t have to make a down payment. A recent article in the Tokyo Shimbun talked about the inherent dangers of this plan, outlining what a typical family could expect to pay for the next 35 years if they buy a typical property usisng the plan. Though the interest rate is fixed, the writer of the article, one of Japan’s most noted housing experts, compared the situation it sets up to the situation caused by the spread of subprime loans in the U.S. Basically, he says that the purpose of the loan is to draw people into the housing market who don’t really make enough money to buy homes. Once they get into the market, they find they will have less money to pay for other things, like their children’s education. The government tried something similar in the 1990s with so-called “relaxed loans” and a lot people went bankrupt. He thinks Flat 35 will lead to even more.

Air conditioners

It’s that time of year again–bonus time, when electrical appliance stores push air conditioners to people who probably already have them. According to government statistics, 90% of Japanese households already have air conditioners installed in their homes, so why do people keep buying new ones? One reason right now is that the government, in order to stimulate consumption, is offering “eco points”–credits that can be used to purchase other things later–for digital TVs, energy-saving refrigerators, and energy-saving air conditioners. The ostensible idea is to promote energy conservation, but it’s difficult to believe that is what is going to happen if everyone buys a new appliance and thus throws their old one away. This seems especially problematic when it comes to aircons, which are heavy and difficult to install and remove. After the jump, an article I wrote for the Asahi Shimbun about air conditioners that still applies. Read More

The bonus that isn’t

One of the more insidious economic practices in Japan is the bonus system. Bonuses are regularly handed out to workers and management twice a year, whether you work in the private or the public sector. Traditionally, they are almost never considered merit-based or, for that matter, even performance-based (performance in terms of company profits, that is). The bonus amount depends on seniority and position, and in practical terms is looked upon not as a “bonus” in the Western sense, but simply as an integral part of the annual salary. However, calling it a bonus gives the employer a lot of leeway and a kind of safety valve when times are tough. It can also be disastrous for people with mortgages. Read More