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Japan’s Economy on Road to Recovery, Central Bank Says

July 11, 2013 by Leave a Comment

TOKYO — Three months into Japan’s bid to reinflate its economy after years of falling prices, the country’s central bank said Thursday that economic conditions were starting to recover, signaling its confidence that the world’s third-largest economy was on the cusp of a long-awaited turnaround.

It was the first time since January 2011, before Japan’s natural and nuclear disasters in March that year, that the Bank of Japan had ventured to use the phrase “recover.” The bank’s message is underpinned by a rebound in Japan’s mainstay exports, helped by a weaker yen, as well as some signs of a broader recovery in consumer spending.

Reflecting its optimism, the central bank’s policy-setting board left monetary policy unchanged and stuck to its goal of hitting 2 percent inflation in two years. To get funds flowing again in the Japanese economy, the bank, led by Governor Haruhiko Kuroda, has pledged to pump 60 trillion to 70 trillion yen, or about $600 billion to $700 billion, into the economy annually.

“Japan’s economy is starting to recover moderately,” the bank said in a statement released at the end of its two-day meeting. For proof, it pointed to a pickup in corporate investment and profits, industrial production, and both business and consumer sentiment.

After years of disappointing growth, Japan’s economy is showing signs of a comeback, thanks to what economists have called the bold economic policies of Prime Minister Shinzo Abe: an aggressive monetary policy, heavy government spending and a set of pro-growth reforms.

Japan is now growing faster than any of the Group of 7 leading economies, logging an annualized G.D.P. growth of 4.1 percent in the first three months of the year. This week, the International Monetary Fund raised its growth outlook for Japan to 2 percent for 2013, putting it well ahead of its G-7 peers. The Tokyo stock market has gained 40 percent this year.

Economists, along with Mr. Abe, have taken to calling his economic program “Abenomics.” The term has featured prominently in campaigning for the July 21 elections for Japan’s upper house of Parliament, which Mr. Abe’s ruling Liberal Democratic Party is favored to win by a landslide.

Still, the central bank acknowledged that it could take time for an all-around recovery in prices to take hold after 15 years of deflation, scaling back its shorter-term inflation outlook. The year-on-year rate of change in consumer prices, excluding fresh food, is still zero, it said, though some indicators suggested a rise in inflation expectations.

Meanwhile, jitters over volatility in government bond markets have also receded in recent weeks, after the bank adjusted the way it conducts its purchases in that market, minimizing any disruption. Despite Japan’s sky-high public debt, long-term interest rates remain far lower than those in the United States or in Europe.

Even as the Fed debates when to phase out its stimulus, the focus in Japan has turned to when the central bank might push ahead with more easing. But the bank’s willingness to stand pat on monetary policy, and on its 2 percent inflation target, nevertheless suggests that the bank is comfortable with letting its program play out in the wider economy for now, economists said.

In a note to clients, Kyohei Morita, a Japan economist at Barclays, said he was pushing back his projection for further easing from the central bank to next April, from an earlier forecast of October this year. A slowdown in government spending as post-disaster reconstruction demand winds down could hurt growth projections for 2014 and force the bank’s hand, he said.

He was optimistic that growth, for now, would receive wide support from strong consumer spending, buttressed not only by improving sentiment but on the impending mass retirement of the country’s postwar baby boomers, who are expected to turn en masse from net savers to net spenders.

“Japan’s economy is increasingly characterized by strong personal consumption, supported by Abenomics and the baby-boomer generation,” Mr. Morita said.

Article source: http://www.nytimes.com/2013/07/12/business/global/japans-economy-on-road-to-recovery-central-bank-says.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Honda to Offer Customers a Home Solar System Option

February 19, 2013 by Leave a Comment

Through a partnership with SolarCity, a residential and commercial installer, Honda and Acura will offer their customers home solar systems at little or no upfront cost, the companies said on Tuesday. The automaker will also offer its dealers preferential terms to lease or buy systems from SolarCity on a case-by-case basis, executives said.

The deal, in which Honda will provide financing for $65 million worth of installations, will help the automaker promote its environmental aims and earn a modest return, executives said. It could also open the door for more corporate investment in solar leasing companies, which has largely been limited to a small cluster of banks to provide capital for their projects.

And SolarCity, one of the few clean-tech start-ups to find a market for an initial public offering of its stock last year, will potentially gain access to tens of millions of new customers through Honda’s vast lists of current and previous owners.

“When we partner with financial institutions, they aren’t promoting us to their customers, they’re essentially just providing us with capital,” said Lyndon R. Rive, SolarCity’s chief executive. But with Honda, he said, the company is gaining, “access to a broader customer base, and a customer base that is conscious of the environment.”

Whether the marriage will prove successful remains to be seen. “I don’t think that by finding Honda buyers you’ve homed in on the perfect solar customer, but there’s enough overlapping between the demographics that you’re better off than the general population,” said Shayle Kann, vice president at GTM Research, adding that car buyers were more likely to own their homes and have the income and credit history to qualify for solar leasing. While the American solar industry in general has been struggling in the face of declining government subsidies, overcapacity in production and a glut of inexpensive Chinese panels, interest and investment in solar leasing, or third-party ownership, has continued to grow. According to a recent report from GTM Research, a renewable energy consulting firm that is a unit of Greentech Media, third-party ownership accounts for more than 70 percent of all residential installations in developed markets like Arizona, California and Colorado and has generated at least $3.4 billion in private investment since 2008.

SolarCity and a rival, Sunrun, were among pioneers of the approach, but players like Clean Power Finance and Vivint, a home security company owned by the Blackstone Group, are also gaining momentum.

In a typical arrangement, a company provides a system at little or no cost in exchange for a long-term contract in which the customer pays a fixed fee for the electricity generated, set at less than the customer would pay for power from the local utility. The solar price often rises over the life of the agreement, which can last 20 years.

Honda approached SolarCity more than a year ago when it was looking for a partner to provide solar installation services for its hybrid and electric vehicle customers, said Ryan Harty, American Honda’s assistant manager for environmental business development. The company then decided to expand to all its customers — a group it is defining “very, very broadly,” Mr. Harty said, to include not just car owners but also those who have explored its Web sites. The offer will be available in 14 states: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, New York, New Jersey, Oregon, Pennsylvania, Texas and Washington, and the District of Columbia.

The two companies say they hope the joint venture leads to projects that integrate solar power and electric vehicle recharging for its customers.

The program will give Honda and Acura customers an extra $400 discount on top of SolarCity’s normal promotions, which they can use to sweeten the terms of the solar contract, like eliminating the escalation of the monthly payment. Honda projects the fund can finance as many as 3,000 systems on homes and 20 for its dealers. If the program catches on, Honda plans to expand it. Executives said they saw more immediate promise in cutting carbon emissions through solar power than the electric vehicles it would sell.

Article source: http://www.nytimes.com/2013/02/20/business/honda-to-offer-customers-a-home-solar-system-option.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Google Spending Millions to Find the Next Google

July 19, 2011 by Leave a Comment

In the hottest market for technology start-up companies in over a decade, the Silicon Valley behemoth is playing venture capitalist in a rush to discover the next Facebook or Zynga.

Other pedigreed tech companies are doing the same, as venture capital dollars coming from corporations approach levels last seen in the dot-com bubble era of 2000.

To some, it is a telltale sign of an overheated industry, symptomatic of a late and ill-advised rush to invest during good times. But Google says it has a weapon to guide it in picking investments — a Google-y secret sauce, which means using data-driven algorithms to analyze the would-be next big thing. Never mind that there often is very little data because the companies are so young, and that most venture capitalists say investing is more of an art than a science. At Google, even art is quantifiable.

“Investing is being in a dark room and trying to find the way out,” said Bill Maris, the managing partner of Google Ventures, the corporate investment arm. “If you have a match, you should light it.”

Corporate venture funds invested $583 million in start-ups in the first three months of the year, according to the National Venture Capital Association, up from $443 million in the same period last year and $245 million in 2009, before tech investing began its rapid turnaround. Today, 10 percent of venture capital dollars come from corporations, nearing the previous bubble-era high of 15 percent in 2000.

Facebook, Zynga and Amazon.com are investing in social media start-ups. AOL Ventures restarted last year after three previous efforts, and Intel Capital expects to invest more this year than the $327 million it invested last year. Google Ventures says it has invested as much money in the first half of this year as in all of last, and Larry Page, the company’s co-founder, who became chief executive this spring, has promised to keep the coffers wide open.

Corporate venture arms have sprung to action before during boom times, like the early 1980s and the late 1990s, but they have had mixed records.

“When the corporate guys get involved, it usually means that we’re at the top of the market,” said Andrew S. Rachleff, who teaches venture capital at Stanford and was a founder of Benchmark Capital, the venture firm. Mr. Rachleff also questioned Google’s reliance on its algorithms. “There’s no analysis to be done when you’re evaluating a company that’s creating a new market, because there’s no market to analyze,” he said. “You have to apply judgment.”

Although even Mr. Maris compares venture investing to “buying lottery tickets,” Google says it has faith in its algorithms. At the same time, it is taking the unusual step of providing the chosen start-ups with access to its 27,770 employees for engineering, recruiting and business advice, and offering office space at the Googleplex and classes on building businesses.

Mr. Page, who declined a request for an interview, has already promised Google Ventures $200 million this year and says a virtually unlimited amount is available, Mr. Maris said, as Google reconnects with its start-up roots. “I’ve had conversations with Larry when he says, ‘Do as much as you can, as fast as you can in as big and disruptive a way as possible,’ ” he said.

Google says its approach is paying off. One of its investments, Ngmoco, was acquired by a Japanese gaming company, DeNA, for up to $400 million, and another, HomeAway, for renting vacation homes, received a warm welcome from investors when it went public last month. A third, Silver Spring Networks, a smart grid company, filed to go public last week.

Google Ventures invests in various areas — the Web, biotechnology and clean technology. It puts large amounts of money into mature companies, but it is also investing small amounts in 100 new companies this year.

To make its picks, the company has built computer algorithms using data from past venture investments and academic literature. For example, for individual companies, Google enters data about how long the founders worked on start-ups before raising money and whether the founders successfully started companies in the past.

It runs similar information about potential investments through the algorithms to get a red, yellow or green light.

Article source: http://feeds.nytimes.com/click.phdo?i=26765bf97a355e0d3c31d80aaa9a5f64

Filed Under: Business News Tagged With: , ,

News Analysis: War of Ideas on U.S. Budget Overshadows Job Struggle

June 4, 2011 by Leave a Comment

Republicans said the slow pace of hiring in May underscored the need for sharp cuts in federal spending and regulation to spur corporate investment. They have refused to increase the debt ceiling, the maximum amount the government can borrow, without an agreement to make such cuts.

They argue that Democratic efforts to revive growth through public spending programs have failed as the economy remained weak and unemployment high almost two years after the end of the recession.

“You talk to job creators around the country like we have,” House Speaker John A. Boehner said Friday. “They’ll tell you the overtaxing, overregulating and overspending that’s going on here in Washington is creating uncertainty and holding them back.”

Democrats counter that Republicans are unnerving businesses by sowing uncertainty about the government’s willingness to pay its debts, and that immediate budget reductions would cut jobs and undermine growth.

Since the end of the recession in June 2009, private employers have added roughly a million jobs. During that same period, however, governments have cut 1.1 million jobs, underscoring the impact of reductions in public spending.

“Republicans in Washington are making it harder to create jobs,” said Representative Sander Levin of Michigan, the top Democrat on the Ways and Means Committee. “They threaten to shut down the government, they threaten to default on our nation’s debts and they threaten the jobs of teachers, police officers and many others. Creating this kind of uncertainty hurts our economic recovery.”

Almost 25 million Americans could not find full-time work during May, but their plight has not gripped Washington. Neither party has suggested that the issue deserves the kind of urgent response that might require ideological compromises.

The Federal Reserve, charged with minimizing unemployment, has indicated that it intends to stand back, waiting on further evidence about the health of the economy before considering new steps to stimulate growth. The central bank is immobilized by the same political forces as Congress, with conservative members of the Fed board and outside critics demanding that it withdraw the money it has pumped into the economy, and liberals arguing for additional aid.

The deadlock actually means that the government will steadily reduce its support for the economy during the second half of 2011. The Fed will complete a plan at the end of June to bolster growth by buying the last of $600 billion in Treasury securities. More than 80 percent of the president’s $800 billion stimulus plan has been disbursed. Last year’s package of $225 billion in tax cuts and jobless benefits will expire at the end of the year.

Both parties seized on the latest economic data as evidence for their positions on deficit reduction, an issue that has displaced jobs as the focus of public debate.

The government must borrow money to pay its bills, the amount it can borrow is set by Congress, and the present limit — the debt ceiling — will be reached in early August. Since taking control of the House and gaining Senate seats last year, Republicans have seized on the need to raise the debt ceiling to demand a broader deal on deficit reduction, including immediate cuts in spending.

Representative Jeb Hensarling, a Texas Republican, said the “administration doesn’t understand that one of the biggest impediments to job creation today is the lack of confidence, a lack of confidence in the future that comes from an administration where regulators have gone wild, from an administration threatening the largest single tax increase in America’s history and an administration that doesn’t take seriously the debt that is threatening our job creators.”

Democrats have been forced into the defensive argument that threatening not to raise the debt ceiling is irresponsible and will certainly shake the confidence of financial markets.

They argue that public spending programs like the stimulus and expanded jobless benefits have provided an incomplete but important response to the devastation wrought by the financial crisis. Representative Chris Van Hollen of Maryland, the top Democrat on the Budget Committee, noted that employment has risen for 15 consecutive months.

“With millions of Americans still out of work and families struggling to make ends meet, there is still more we must do,” said Mr. Van Hollen, a participant in bipartisan budget deal talks. “Unfortunately, Washington Republicans have failed to make job creation a priority. In fact, economists of every political stripe have said their budget would threaten our fragile recovery.”

Republicans have also embraced the argument of business trade groups that regulation is impeding economic growth.

“Today’s increase in the unemployment rate underscores the need for dramatic action to break down barriers to job creation. First among these are unnecessary regulations,” said John Engler, president of the Business Roundtable. “We need action by government agencies to clear out obsolete rules and streamline permitting to reduce delays and impediments for companies to invest and grow.”

“The private sector is the only hope for future job creation,” he said.

House Democrats have tried to seize momentum by rolling out a series of bills intended to bolster domestic manufacturing and construction under the rubric of “Make It in America.” The measures promote initiatives like high speed rail and other public transit projects, call for a permanent research and development tax credit and direct the government to develop a national manufacturing strategy.

But the proposals have little chance in the Republican-controlled House and represent a long-term view rather than an immediate fix for unemployment.

Article source: http://www.nytimes.com/2011/06/04/business/economy/04assess.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,