Richard Katz

Expertise: Japan economy, Japan politics, U.S.-Japan relations

Richard Katz is Editor of The Oriental Economist Report (TOE), a monthly newsletter on Japan published by Japan Watchers LLC, the semi-weekly TOE Alert, and a New York City correspondent at Weekly Toyo Keizai, one of the three leadings Japanese business magazines.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails. The first was Japan: The System That Soured--The Rise and Fall of the Japanese Economic Miracle (M.E. Sharpe 1998). A Japanese edition was published in 1999 under the title Kusariyuku Nihon To Iu System (Toyo Keizai Shimposa).

The book received favorable reviews from such publications as the Wall Street Journal, Business Week, Nihon Keizai Shimbun, Asahi Shimbun, Toyo Keizai, The Japan QuarterlyThe Journal of Japanese Studies and the Far Eastern Economic Review, among others. Toyo Keizai named it "one of the 20 books needed to understand the 21st century." In 2002, his second book was published, entitled Japanese Phoenix: The Long Road to Economic Revival (M.E. Sharpe) in English and Fushicho no Nihon Keizai (Toyo Keizai) in Japanese. It also received favorable reviewsBoth books have been widely used in university courses.

He has testified several times about Japan and Asia to Congressional committees. He has frequently been invited to meet with senior officials in both the US and Japanese governments to provide analysis. In the year 2000, he served on the Council of Foreign Relations' Task Force on the Japanese economy. He regularly lectures at universities and conferences.

Mr. Katz’s essays have been published by Foreign AffairsThe Washington Quarterly, The International Economy Magazine, Current History, Challenge and The American Prospect. Op‑eds have appeared in such papers as the New York Times, London Financial Times, Asian Wall Street Journal, Asahi Evening News, Christian Science Monitor and the Investors Business Daily. He is the author of the article on the Japanese economy in the Microsoft Encarta Encyclopedia. Mr. Katz's comments on Japan are frequently quoted in major publications, including the Washington Post, Wall Street Journal, New York Times, Los Angeles Times, London Economist, London Financial Times, Chicago Tribune, Time Magazine International, Newsweek International, and the San Jose Mercury, and he has been interviewed on CNN, The PBS Newshour with Jim LehrerMarketplace, Bloomberg TV, and BBC's The World.

Having received his B.A. degree in History from Columbia University in 1973, Mr. Katz went on to obtain his M.A. in Economics at New York University (NYU) in 1996.

Japan will eventually reform and revive. Its tragedy is that it is filled with smart, ambitious, creative individuals who are trapped in once vibrant but now ossified political and economic institutions. The whole is so much less than the sum of its parts. The country will revive when it finally undertakes the necessary institutional overhaul. But that takes a visionary leader; Shinzo Abe is not that leader.
Hits:
  • Japan’s economy could not recover without structural reform and structural reform would not occur until the emergence of genuinely contested elections.

  • The Koizumi economic boom would not last; there was less economic reform than analysts claimed

  • The JGB market would not crash (several times over the past decade or so when stories about imminent crashes emerged)

  • There would be no run on the banks in 2003

  • The rescue of Resona Bank in 2003 was the beginning of a real change toward solving the nonperforming loan crisis

  • The “decoupling” theory popular in 2006-07 was wrong and a recession in the US would cause a horrific recession in Japan, as it did in 2008-09

  • The Democratic Party of Japan (DPJ) would lose power if it passed the consumption tax

  • All of Japan’s nuclear plants would end up being shut down in the aftermath of the Fukushima disaster

  • China would not intentionally use military force to take Senkaku Islands and would pull back on economic pressure because it needs Japan just as much as Japan needs China

Misses:
  • While the Koizumi boom did peter out, as predicted in 7b, it took longer to occur than I had predicted

  • The DPJ would gain a single-seat majority in the Upper House in the 2010 elections (made shortly after the DPJ’s big Lower House win in 2009

  • The DPJ would not pass the consumption tax out of fear of losing power

  • The 2009 DPJ victory meant the emergence of a genuine two-party system in Japan (hinged on prediction a being correct) and, if the DPJ won the 2013 Lower House election, the Liberal Democratic Party (LDP) disappearing

What I Learned:

Foreseeing the direction of events is one thing; timing is a lot harder

Key points including in this report are, - TPP will not be voted on in lame duck session of Congress in November-December - If Clinton is elected, she is unlikely to revisit TPP in any form during first year or two in office, if ever - Without US ratification, TPP will die; TPP rules require ratification by at least six of the eleven TPP countries, representing at least 85% of TPP-wide GDP; that 85% target cannot be reached without ratification by both the US and Japan - Other countries are unwilling to reopen negotiations with the US, even in the form of so‑called “side-letters,” because, even then, no President can assure them Congress will not come back with even more demands
The Bank of Japan’s (BOJ) failed negative interest rate policy (NIRP) is provoking increased opposition among the big banks and the Financial Services Agency (FSA), the ministry which protects them
The Oriental Economist June 2016 Issue topics cover Nurturing entrepreneurs, UH election prospects, Foreign Firms in Japan, Economy Watch, Losing steam among voters, Mr. Obama goes to Hiroshima.
Key points of this report, - The current profits of Japanese corporations have fallen in the last three quarters. For all corporations, current profits are down 16% from April-June 2015 - Among manufacturers, who are the biggest multinationals, profits are down a whopping 29% from three quarters ago to a level first reached 13 years ago in 2003 - In part, profits are down because sales have slumped, but an even bigger reason for the plunge in profits is that the ratio of profits-to-sales is down 13.5% from its peak in April-June 2015 - The roller coaster ride of the yen’s value has played a pivotal role in the roller coaster ride of profits; over the last five years, there has been a stunningly high 95% correlation between the profits:sales ratio and the value of the yen ​- Most of the impact of the ups and downs of the yen on profits is a pure accounting illusion, but one that, for a while, misled many foreign investors
Richard Katz's May 2016 issue of the Oriental Economist Report

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Expertise

Japan economy, Japan politics, U.S.-Japan relations

Location

United States

Experience

Current Experience

Editor of The Oriental Economist Report

Past Experience

  • Visiting Lecturer in Economics at the State University of New York at Stony Brook.

Education

  • M.A. in Economics at New York University