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A friend who worked at a major Japanese bank said that its pretty much an unsaid rule that they won’t promote any non-Japanese after a certain level.

Can’t see that being good for any business if you constrain outside talent like that.

This applies to most all major Japanese companies. There have been two notable cases of non-Japanese execs rising to CEO, Carlos Ghosn of Nissan and Michael Woodford of Olympus, and both ended up as cautionary tales of what happens when you refuse to be just a pliable figurehead and try to effect real change.

Also Howard Stringer.

> non-Japanese execs rising to CEO

To note, naturalized South East asians do raise to CEO. Son Masayoshi is of Korean ancestry for instance.

When you say “non Japanese” I suppose you mean “westerner that doesn’t naturalize”. Which makes me realize, I genuinely don’t know how many US CEOs have kept a foreign nationality while helming a huge company in the US. I’d assume not a lot.

Masayoshi Son is 3rd-generation Korean-Japanese. For all practical purposes he's Japanese, and he naturalized in 1990.

Son is just a founder. Nothing weird to be a CEO. It's hard to find other asian examples except some industry (for example, pachinko for historical reasons).

There’s a combination of few “big” companies being founded recently, and the stronger attractiveness of China and Korea to young founders I assume, but Japanese-Korean ventures will naturally have a fair share of Korean CEOs (Lotte from the top of my head)

I would also assume entertainment business has also a number of them, but they might also not put it forward for image reason.

I think some cultural relativity is needed to tamper that, the US has a generally open minded idea of what it means to naturalize (both legally and culturally). There's also a pretty number of big companies founded or run by first generation immigrants in the US.

> Son Masayoshi is of Korean ancestry for instance.

Korea is East Asian. Southeast Asia consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Add Howard Stringer (CEO of Sony, 2005-2012). He's pretty close to a cautionary tale, but that time period also included a major earthquake/tsunami/nuclear disaster as well as the 2008 credit market collapse.

I mean, that should work as long as they are also good at identifying talent. There are plenty of Japanese people who are very good at their jobs, and being racist (if we're going to rely on pure pragmatism) doesn't in itself make management incompetent. The problem is that the line of thinking that makes racism sound like a good idea is one that also leads to other poor decisions.

No I think it is still bad in isolation as it's prone to group think and you lose the chance to exploit experience generated globally which may be unique and irreplaceable.

Racism does actually restrict your competitiveness, theres been a bunch of studies done on this. Regardless of the availability of sufficiently skilled Japanese labor, humans are pretty non-fungible when it comes to specialized skills. Losing access to the worldwide pool of labor is just deliberately kneecapping their own companies.

Humans are non-fungible, but despite the rhetoric, I don't think any company is actually hiring the best people they possibly could. There's so much noise in the hiring process to begin with, I have a hard time believing that racism is the one obstacle between the status-quo and paradise. More likely, there are a hundred things wrong with the hiring process, and racism is number 86.

You are right that it restricts competitiveness, but even before that, integrating people thinking different and from different backgrounds requires a level of flexibility and resilience that is probably missing from these entities.

It’s not rare to see Japanese people looking for companies that recruit foreigners and “exotic” profiles, using that as a canary to signal a company that can deal with a range of issues, and won’t try to have them quit if they take a parental leave.

I suppose with their birthrates, that pool of Japanese talent is only going to shrink.

It seems like your narrative does not match the fact. Current account surplus has been the problem for Japan, not deficit.

There has been recent change starting March 2022 has depreciated recently, but it only makes Japanese exports more competitive.

Japan's massive public debt is internal in domestic currency.

While you are right, the special thing in our credit based financial system in the 21st century is that this is happening on a global scale and all major currencies do it (USD, CNY, EUR, JPY). Countries with smaller currencies are even more corrupt of course.

While credit based financial system is a ponzi scheme, it has the huge advantage in trading of transfering digitally, which was not possible for any debit based financial system before Bitcoin.

> this is happening on a global scale and all major currencies do it (USD, CNY, EUR, JPY)

This is nonsense. Mathematically. OP argues Japanese companies print “a foreign currency profit for head office that requires converting foreign currency into” a falling local currency. That can’t simultaneously be true of the U.S. dollar and Japanese yen. If one currency is falling the other is rising.

It works if you zoom out a level. If all fiat currencies are printing massively and holding nominal rates near zero (and real rates negative), then the value of all currencies relative to goods and services will fall. Owning anything which produces goods and services, at any price, becomes a good bet.

You can run this mathematically with a discounted cash flow analysis. Plug in a negative discount rate to any positive series of cash flows. The sum becomes infinite, i.e. under conditions of negative real interest rates, the fair market value for any cash-flowing asset is infinite. This is pretty close to the conditions that exist in most developed economies today, and this is why you see these outlandish valuations for assets.

You're seeing the beginnings of a worldwide currency crisis. Most of us who grew up in the developed world over the last 80 years are used to our money being worth something; when this no longer holds, counterintuitive behavior results.

> then the value of all currencies relative to goods and services will fall. Owning anything which produces goods and services, at any price, becomes a good bet

You’re describing inflation. OP describes accounting trickery around currency conversion.

In the short run, yes, inflation boosts revenue. This is well known and why equities are a decent inflation hedge. Decent because in the medium term, as in months, inflation raises producer costs. (Supply-side inflationary pressure, what we saw in the early recovery, raises producers’ prices before consumers’.)

> a negative discount rate

Inflation doesn’t cause negative discount rates.

Also, negative discount rates don’t produce infinite valuations. DCF is a chained present-value calculation. $100 in 5 years discounted at -4% is worth $123 today [1]. (This is how inflation compounds.)

That bet, however, requires not only negative rates today, but assurance of that being the case for the next five years. If you’re getting infinities, you’re using a simplified model which assumes r > 0.

> seeing the beginnings of a worldwide currency crisis

This doesn’t make sense. Fundamentally. Currency crises are a relative phenomenon.

You can posit some other crisis, like a worldwide collapse of governments, the sort gold bugs and now crypto peddlers have pitched for centuries. But there is no more evidence of that now than there was in the 19th century.

[1] 100 / (1 -4%) ^ 5

> but my gut tells me this is a massive ponzi scheme that will explode the moment the Japanese central bank raises their interest rate.

What makes you think the BoJ will ever reverse this trend (long term)?

Japan has had negative real interest rates for 31 years...

I am pointing out one of the many side effects of this policy.

31 years and they still haven’t figured out a way forward. We are all in the same mess, Japan’s situation is just ahead of us. I think their situation is our future. A stagnant economy of zombie companies, a government & central bank playing endless games to avoid collapse and crisis. They will keep this going as long as possible.

I hope they do, it would be an instruction manual for us all, but each decade that passes dims my hope.

> We are all in the same mess, Japan’s situation is just ahead of us

We are in opposite situations.

Japan has been fighting deflation for decades. The U.S. deployed massive stimulus to fight deflation and is now raising rates and cutting the budget deficit to fight the resulting inflation.

By the way, i think the ECB reaction is better than the Fed, for the second time in less than 3 years. Maybe the Fed will end up being right this time around but it feels like they are once again acting out of tempo. Maybe being late/inefficient at first with COVID made them react too much now? They might be right still, but the Fed acting as scared as the BoE is a bad look for confidence.

>>massive ponzi scheme

I am pretty sure that is the case for almost all the economies of the world that are based on fiat currency combined with debt fueled growth. Which is pretty much all of them.

At some point this dangerous game of musical chairs of sovereign debt will end, and it will be bad for all of humanity

We've been here before many times in history. Some debt gets repaid, some is inflated away, some defaults.

The real crisis won't be in developed countries because whether you like it or not, you need to borrow and spend in their fiat to do business and EVERYONE wants to do business in developed countries. The crisis will be in emerging markets where no one will be willing to lend if rates hit 5% in the US.

This is the case for any economy which relies on the easy extraction of cheap but ultimately finite energy/resources.

Debt is a human constraints that could be erased by a the stroke of a pen. Sure with political consequences, but civilization have endured these kind of consequences before. Debt have been erased, new currencies erected.

Once you run out of oil though... You can't legislate for tractors to run on good will to feed the planet.

I am way more worried of actual physical constraints and the consequences of reaching them (ecosystem collapse, political extremism, wars) than our self imposed idiotic economic models.

The problem with the believe that debt can be "erased by a the stroke of a pen with political consequences" is that those consequences would be far more than just political. Wars start over less, political extremism is driven by those kind of actions.

Actions like that always have winners and losers.

But no. Money is just a way invented to distribute production that human society invented. Debt is a mercantile, then capitalist tool to push toward creating productive assets (see venitian shipowners or textile factories before the industrial revolution). It now have new use with the banking system, but obligations are still basically the same.

Also, while i would rather we don't use debt, it's not at all fueling growth. Growth is fueled by energy use (productivity increase is marginal at best), and growth create liquidity needs, which is either resolved by money printing or by debt. So it's backward.

Gaijin (foreigner) is considered a rude word, just to put it into perspective.