Mid-July 2022, I was in Vietnam.
「vitality」＝「growth×opportunity×youth」＝Vietnam
”The population of Ho Chi Minh City was statistically 12 million, but if you include migrant workers, the actual population was said to be around 20 million. ”
I heard this when I first flew to Vietnam in around 2007. Due to Covid , many had returned to the countryside. However, the population density and the number of motorcycles were still huge.
Vietnam and Real Estate Investment
Real Estate Fund!
I originally started going to Vietnam with the idea of creating a real estate fund.
After many months of researching, I decided not to start this business.
Vietnam business partners～ Full of vitality
My Vietnam business partners who were already running the real estate company also came to a standstill. Lehman Shock has happened. Eventually, they were on the verge of death. They tried a number of businesses to revive themselves. I continued to support them as much as I could.
One of their businesses has taken off and now time to considering an IPO. During this period, they had to pay off a large amount of debt. They had been fantastic. I met with them for the first time in 3 years. I was overjoyed to see them cheerfully and passionately having business talks again with vitality.
Nowadays, the world economy is in turmoil again. I believe our relationship with them will continue through tears and laughter.
Global Stagflation
Stag+flation
･･･Inflation and Stagnation occur at the same time
Japan is also in the midst of turmoil. The issue of Japan’s finances (government bonds), which I have been talking about for many years, seems to be getting more and more coverage in the media these days.
No more turning a blind eye
When the global economy was stable, Japanese finance could turn a blind eye. But now that we are in global stagflation and the yen has depreciated to nearly 140 yen to the dollar, Japanese have come to realize the abnormality of its monetary policy.
Japan’s debt-to-GDP ratio
The chart below shows Japan’s debt-to-GDP ratio. Please take a look at the chart’s cut off at the bottom in the postwar period in 1945.This is where the hyperinflation, deposit blockade, the new yen switch, the property tax, the special wartime compensation tax, and other debt adjustments were made.
Now in 2022, debt-to-GDP ratio is higher than the postwar situation.
Let’s Think It Seriously～Recover vitality
Japan, TOP on the opposite side of the scale
What happens if inflation occurs? The BOJ’s response would be to raise interest rates. Japan’s outstanding debt is 250% of its GDP. Simply saying, it is the TOP among developed countries.
Don’t take it wrong. It’s the TOP on the opposite side of the scale. The interest rate on that debt will go up. We will not be able to pay it back.
Some say, ‘’What’s the deal about Japan carrying debt? They are mostly in yen.’’
Actually, Debt is a debt. It must be paid back. A very severe situation is expected.
No one knows when or what will happen from this situation.
People especially the younger generation must look, understand, and think at the current situation seriously.
I’m now on my Europe biz trip. Heading to 4 countries & 7 places within two weeks.
Please look forward to my next letter.
Masahiko KUMADA
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