Tokyo

I keep putting Tokyo at the top of every list because it has 35 million people in its metropolitan area with an annual GDP of $1.479 trillion.  However, my research into China has convinced me that a tighter definition of "city" should be used when making comparisons.  Suzhou  has its own identity separate from Shanghai.  And I now see Los Angeles as 3 cities:  Los Angeles County, Orange County and Riverside/San Bernadino.  In the US, I use Metropolitan Statistical Area (MSA) as the definition (not CSA), and in Europe the Larger Urban Zone (LUZ).

It's time to apply the same tighter definition to Japan.  Each prefecture making up Tokyo should be treated as its own metro area.  And the other big cities (Osaka, Nagoya) should be treated similarly.

So the list of cities in Japan will be as follows. (This is not a complete list of cities in Japan, just the most important ones).  These are all prefectures, except for Kobe and Sapporo.

1. Tokyo Metropolis (13.0 million, $923 billion)
2. Yokohama/Kawasaki (Kanagawa prefecture), formerly included with Tokyo (9.0 million,  $320 billion)
3. Osaka (Osaka prefecture) (8.9 million, $389 billion) 
4. Nagoya (Aichi prefecture) (7.4 million, $372 billion)
5. Saitama Prefecture, formerly included with Tokyo (7.2 million, $211 billion)
6. Chiba Prefecture, formerly included with Tokyo (6.2 million, $197 billion)
7. Fukuoka Prefecture (5.1 million, $185 billion) 
8. Hiroshima Prefecture (2.9 million, $120 billion)
9. Kyoto Prefecture (2.6 million, $101 billion)
10. Kobe (aka Kobe Metropolitan Employment Area, part of Hyogo prefecture)  (2.3 million, est. $90 billion)
11. Sapporo (Ishikari subprefecture) (2.3 million, est. $90 billion)
12. Sendai (Miyagi prefecture) (2.3 million, $83 billion)

See also Top Japanese Cities by GDP

Yakuza in Japan

The January version of the New Yorker has a fascinating article about Jake Adelstein, an American investigative reporter in Japan who writes about the yakuza.  Some interesting bits:

1. There are more than 80,000 yakuza in Japan, "whereas in America the Mafia had only five thousand in its heyday".
2.  Many Japanese companies have ties to the yakuza.  The yakuza are involved with real estate development and run hedge funds.
3.  TEPCO, the company that owns the Fukushima nuclear reactors has ties to the yakuza, and many of the cleanup crew have bodies covered with tatoos.
4.  The yakuza and the police had mutual respect, and when a yakuza killed someone, they would turn themselves into the police.  The police in turn would notify yakuza before making a bust.
5.  The new generation of yakuza is much violent and will engage in theft or robbery of "civilians", which was unheard of before.

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In the late 1990s, the yakuza got into finance. Yamaguchi-gumi leader Masaru Takumi set the example as first of a new breed— the economic yakuza—observing that “from now on, the first thing a yakuza needs to do when he gets up in the morning is read the business section of the newspaper.” The Yamaguchi-gumi have been particularly interested in venture firms, buying up stocks and creating markets with hundreds of listed companies, all with mob connections. In the 2008 edition of their annual report on crime in Japan, the National Police Agency (NPA) added a special section on the rapid emergence of organized crime into Japan’s securities and financial markets. The NPA report was a surprisingly stark admission of the crisis, with the police conceding they were fighting to protect Japan’s international reputation as much as its economy. The report went on to state that the yakuza had become frequent stock-traders, adept at market manipulation. The NPA warned that the yakuza’s move from “old-fashioned” crime rackets like drugs and prostitution, to mainstream financial markets is “a disease that will shake the foundations of the economy.”
--http://www.worldpolicy.org/blog/last-yakuza

Japan is run by Yakuza

See: http://www.businessweek.com/magazine/the-story-behind-the-olympus-scandal-02162012.html

"Woodford, 51, recounted how he had just returned from Hong Kong, having fled Tokyo after a board meeting in which Olympus Chairman Tsuyoshi Kikukawa had fired him. The cause for dismissal, according to Woodford: his insistence that Olympus officials come clean about a series of questionable purchases dating to 2006, totaling $1.6 billion, none of which had been adequately reported in the company’s consolidated financial statements. The deals had been approved by Kikukawa and the Olympus board, yet in several cases the parties receiving the sums were not even clearly identified in Olympus’s books. (At least one Japanese magazine had strongly hinted that the Yakuza were beneficiaries of some of these shady deals.) Woodford, frustrated by the board’s stonewalling, had hired the accounting firm PricewaterhouseCoopers to conduct an independent audit of the suspicious transactions. For several weeks leading up to his dismissal, he had been calling the board to account for these transactions, and eventually demanded the board’s resignation. Instead, Woodford was purged. And now he was running for his life."

A comment below the story claims:  "Based on my own personal experience, I can say with certainty that Mr. Woodford's experience is the rule rather than the exception at most large Japanese companies."

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Here is another article about the same thing:
"Few in Japan would be surprised to learn that local executives and criminals are hand in glove. In 1997, the chairman of Japan's then largest bank, Dai-Ichi Kangyo, was convicted of lending billions of yen to members of Japanese organized-crime groups, collectively called the yakuza. Three years ago, in response to reports that organized crime was investing large sums in public companies, Japan's Securities and Exchange Surveillance Commission compiled an index of more than 50 listed firms with alleged yakuza ties"

Read more: http://www.time.com/time/magazine/article/0,9171,2098601,00.html

Is this the end of Japan?

http://theeconomiccollapseblog.com/archives/has-the-tsunami-in-japan-destroyed-the-japanese-economy

The tsunami has caused trillions of dollars in damage, and the Japanese are already enormously in debt, which they are able to maintain only because the interest rates are extremely low. Could the tsunami be the event that completely pushes Japan over the edge? Ironically, this may make the dollar seem like a safe haven.

Japan will default in 2012

JJapan is in much worse shape than the US in terms of its national debt, but this is offset by the facts that most of its debts are internally held, they have huge reserves, and they are a net exporter country. Nonetheless, it is certain that they will default and this will happen before the US does.

According to Kyle Bass, (see also this) this will occur within 1-2 years, so I will call it 2012. Japan has already entered the Keynesian endpoint: their debt service costs exceed their income. They are already more than 1 quadrillion yen in debt and the revenue is only 40 trillion yen, with expenses at 97 trillion. Their national savings rate is now zero percent. Their system has been like a Ponzi scheme that works as long as there are new buyers. Well now there are no new buyers as their demographics have changed.

The only good news about this is that Japan has been relatively isolated from the rest of the world so the default won't cause a chain reaction. And maybe it will cause the US to wake up and realize how severe our problems are.