Blueprint for Japan 2020Blueprint for Japan 2020

Joichi Ito (Neoteny)Joichi Ito (Neoteny)

Oki Matsumoto (Monex)Oki Matsumoto (Monex)

Blueprint for Japan 2020

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Condition of Diversity (1)

0

10

20

30

40

50

60

70

JAP

AN

GE

RM

AN

Y

FR

AN

CE

ITA

LY

UK

CA

NA

DA

US

A

(%)

0

20

40

60

80

100

JAP

AN

UK

US

A

FR

AN

CE

GE

RM

AN

Y

CA

NA

DA

ITA

LY

PE

RC

EN

TA

GE

Feb 1999 July 2000

• Entrepreneurship is not socially accepted

※The graph on the leftPercentage “yes” on item: People you know respect those starting a new business

• Japanese Afraid to Start Companies

※The graph on the rightPercentage “yes” on item: Fear of failure would prevent you from starting business

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Name-brandUniversity GraduatesOthers

Condition of Diversity (2)

32%

4%

1955

LDP related

LDP unrelated

PNC

DNC

2002

(In U.S.)

1955

LDP related

LDP unrelated

PNC

DNC

2002

(In U.S.)

RulingParty

※ The circle inside is all University Graduates. The circle outside is all Presidents of Japanese listed Companies

•Japanese society have a bias for Academic Background.

The name-brand university graduates that occupy 4% in all university graduates occupy 32% in all presidents of Japanese listed companies

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Condition of Democracy (1)

“Me too” contents of Japanese newspapers

Journalists are shut out by violation

70% of date source of Japanese major newspaper are from Press Clubs

Abandonment of Agenda Setting

Adhesion between government and journalists

Circulation of NewspapersBad Influence of Press Clubs

0

200

400

600

800

1000

1200

U.S.A. today WSJ Nikkei Mainichi Yomiuri

(10 thouand)

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Condition of Democracy (2)

Unsuccessful Successful

0

20000

40000

60000

80000

100000

120000

140000

Rate to the smallest number

0%50%

100%150%200%250%300%

Shim

an

e3

Koch

i 3

Shim

an

e2

Toky

o 2

2

Kanagaw

a7

Kanagaw

a14

• Those who got less poll than

the unsuccessfuls were elected.

• A vote in some districts have double value to one in other districts.

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Condition of Democracy (3)

25

35

45

55

65

75

20～24

25～29

30～34

35～39

40～44

45～49

50～54

55～59

60～64

65～69

Over70

PE

RC

EN

TA

GE

41 Accounts payable 13

Securities 112Short-term Governmentsecurities held by the public 39

Accounts receivable 22 Government bonds held by the public230Loans receivable 286 Postal savings 260Money in trust 22 Public pension liabilities 797Allowance for doubtful accounts-2 Advanced received 18Tangible asset 176 Reserves 28Intangible asset 0 Insurance reserves 107Investment 42 Others 16Others 2Total Assets 701 Total liabilities 1508

The Japanese Government Balance Sheet (Trillions of Yen)

• The difference between Assets and Liabilities is 806 Trillions of Yen <Insolvent!>

• The young generations that will pay 806 trillion yen do not vote very much in national elections.

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Condition of Capital Markets (1)

Rate of Market Capitalization to GDP

PBR of TSE listed Companies

PBR < 1 PBR > 1

0

2000

4000

6000

8000

10000

12000

Japan U.S.

(Bill

ion

s of

Dolla

r)

Market CapitalizationGDP

※ Market Capitalization of Japan is derived from TSE. Market Capitalization of U.S. is derived from NYSE and Nasdaq.

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Condition of Capital Markets (2)

Case of a large Japanese bank:

Without any reduction of capital, about 20 billion dollars of public money was injected.

On an annual announcement of some billion dollars of newly borne write-off for bad loans, the share price stays the same level.

The share is still trading with the market capitalization of the bank to be about 20 billion dollars.

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0% 20% 40% 60% 80% 100%

U.S.

Japan

Cash & Deposit Bond Investment Trust Stock Insurance Others

54%

11.9% 34.1%

7.2%

Japanese do not invest much into Stocks

1420Trillion Yen

32.1Trillion Dollar

Condition of Capital Markets (3)

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Diversity is not recognized in Japan

Needs to prevail the sense of diversity

Needs for educational reform

Needs for more to communicate in English

………

Diversity - Analysis

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Democracy - Analysis

Democracy is not established in Japan

Needs for the election system reform

Needs for the media to become independent

Needs for more disclosure of the nation state

………

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Capital Markets - Analysis

Capital Markets is not working in Japan

Needs for the independent SEC

Needs for the reallocation of resources

Needs for transparent corporate governance

………

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What to do?

One idea is to create new indices,

…not GDP, not Market Cap.

Japan Diversity Index

Japan Democracy Index

Japan Capital Markets Index

…and we track them.