Did the Japanese get it right ?

Japan has not been growing for the past many years. It saw a stock market bubble in 1980’s and has never seen those highs again. It has also gone through a real estate bubble.
The Nikkei, its market Index closed at 12346 today. This is down from a high of 18270 recorded in July 2007, 14 months ago. So, what did the Japanese get right ?

TIME magazine, in its issue dated Sept 15, 2008 writes:

Consider Japan by any standards that count – public safety, widely shared prosperity, quality of infrastructure, health and education indicators, family stability – a remarkably well governed society. Its best companies set standards for innovation and efficiency. …….

What should India become – Japan – which is an ocean of peace and calm, or America – where you get paid hundreds of million to create a sub prime crisis.

What is the difference between Japan and USA ? The difference lies in the importance given to financial wizards. In Japan, the people who build industries, services, businesses are given importance. In the USA, people who create financial wonderlands are the most important of the business leaders. Unfortunately, India seems to be going the US way.

Why is this relevant in a trading blog ?
First, Trading requires a calm mind. The Japanese pursuit of Zen in their lives provides this calmness.
Second, Success in trading requires single minded dedication to the pursuit of excellence. You improve your skills as a trader every day. The money comes when the market wishes to give it to you. This is the Japanese way of life.
Third, all traders are equal. In a Japanese company, there will be only a small difference between salaries of the lowest worker and the highest paid official. All employees are considered equal. In the same way, you – a trader are as good as any other trader in the world. Just do your duty, then leave the fruits of your labor to the almighty.

Socialism for the Rich ?

Indians should take note of big changes taking place in the world economy. After the collapse of the USSR, capitalism of the American Variety became the popular method of economic policy. Now, the strongest advocate of capitalism, the USA, has done the unthinkable – Nationalization.
By taking over the two housing finance companies, America has made Nationalization, acceptable once again. But, blogs say that this move to socialism is really to protect the rich – since it protects the large investment banks which created the sub-prime crisis.

Kenneth Rogoff , a senior economist, writes in the Gaurdian : (Full article here)
There is also a fairness issue. The financial sector has produced extraordinary profits, …. Why, then, should ordinary taxpayers foot the bill to bail out the financial industry?

Nouriel Roubini, now world famous for correctly predicting the sub prime crisis, writes here:
This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China…… 
(Bush, Paulson, Bernanke) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected.

My view: Lessons for Indians:
India has followed a model of extreme capitalism in the last four years. The poor and the middle class watched as the rich grew richer. This model is likely to end in early 2009, and a more equitable society will emerge. Investors should focus on PSU shares, as this segment will carry the least risk of uncertainty. Avoid brokerages, privately owned financials, real estate.
For Investors: There is likely to be more pain in the stock market. Rallies should be considered as bear market up moves, unless proved otherwise.
The FII’s – in big, deep problems of their own, should not be expected to invest in India, in large amounts, in the near future.