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Disneyland with the Death Penalty

 



Disneyland with the Death Penalty 

We sent William Gibson to Singapore to see whether that clean dystopia represents our techno future.

By William Gibson

“It’s like an entire country run by Jeffrey Katzenberg,” the producer had said, “under the motto ‘Be happy or I’ll kill you.’” We were sitting in an office a block from Rodeo Drive, on large black furniture leased with Japanese venture capital.

Now that I’m actually here, the Disneyland metaphor is proving impossible to shake. For that matter, Rodeo Drive comes frequently to mind, though the local equivalent feels more like 30 or 40 Beverly Centers put end to end.

;-)

Was it Laurie Anderson who said that VR would never look real until they learned how to put some dirt in it? Singapore’s airport, the Changi Airtropolis, seemed to possess no more resolution than some early VPL world. There was no dirt whatsoever; no muss, no furred fractal edge to things. Outside, the organic, florid as ever in the tropics, had been gardened into brilliant green, and all-too-perfect examples of itself. Only the clouds were feathered with chaos - weird columnar structures towering above the Strait of China.

The cab driver warned me about littering. He asked where I was from.

He asked if it was clean there. “Singapore very clean city.” One of those annoying Japanese-style mechanical bells cut in as he exceeded the speed limit, just to remind us both that he was doing it. There seemed to be golf courses on either side of the freeway… .

“You come for golf?”

“No.”

“Business?”

“Pleasure.”

He sucked his teeth. He had his doubts about that one.

Singapore is a relentlessly G-rated experience, micromanaged by a state that has the look and feel of a very large corporation. If IBM had ever bothered to actually possess a physical country, that country might have had a lot in common with Singapore. There’s a certain white-shirted constraint, an absolute humorlessness in the way Singapore Ltd. operates; conformity here is the prime directive, and the fuzzier brands of creativity are in extremely short supply.

The physical past here has almost entirely vanished.

There is no slack in Singapore. Imagine an Asian version of Zurich operating as an offshore capsule at the foot of Malaysia; an affluent microcosm whose citizens inhabit something that feels like, well, Disneyland. Disneyland with the death penalty.

But Disneyland wasn’t built atop an equally peculiar 19th-century theme park - something constructed to meet both the romantic longings and purely mercantile needs of the British Empire. Modern Singapore was - bits of the Victorian construct, dressed in spanking-fresh paint, protrude at quaint angles from the white-flanked glitter of the neo-Gernsbackian metropolis. These few very deliberate fragments of historical texture serve as a reminder of just how deliciously odd an entrepot Singapore once was - a product of Empire kinkier even than Hong Kong.

The sensation of trying to connect psychically with the old Singapore is rather painful, as though Disneyland’s New Orleans Square had been erected on the site of the actual French Quarter, obliterating it in the process but leaving in its place a glassy simulacrum. The facades of the remaining Victorian shop-houses recall Covent Garden on some impossibly bright London day. I took several solitary, jet-lagged walks at dawn, when a city’s ghosts tend to be most visible, but there was very little to be seen of previous realities: Joss stick smouldering in an old brass holder on the white-painted column of a shop-house; a mirror positioned above the door of a supplier of electrical goods, set to snare and deflect the evil that travels in a straight line; a rusty trishaw, chained to a freshly painted iron railing. The physical past, here, has almost entirely vanished.

Today’s Singapore is far more precisely the result of Lee Kuan Yew’s vision than the Manchester of the East ever was of Sir Stamford Raffles’.

In 1811, when Temenggong, a local chief, arrived to resettle Singapura, the Lion City, with a hundred Malays, the jungle had long since reclaimed the ruins of a 14th-century city once warred over by Java, Siam, and the Chinese. A mere eight years later came Sir Stamford Raffles, stepping ashore amid a squirming tangle of kraits and river pirates, to declare the place a splendid spot on which to create, from the ground up, a British trading base. It was Raffles’s singular vision to set out the various colonial jewels in Her Majesty’s crown as distinct ethnic quarters: here Arab Street, here Tanjong Pagar (Chinese), here Serangoon Road (Indian). And Raffles’s theme park boomed for 110 years - a free port, a Boy’s Own fantasy out of Talbot Mundy, with every human spice of Asia set out on a neatly segmented tray of sturdy British china: “the Manchester of the East.” A very hot ticket indeed.

When the Japanese came and took it all, with dismaying ease, the British dream-time ended; the postwar years brought rapid decay, and equally rapid aspirations for independence. In 1965, Mr. Lee Kuan Yew, a Cambridge- educated lawyer, became the country’s first prime minister. Today’s Singapore is far more precisely the result of Lee Kuan Yew’s vision than the Manchester of the East ever was of Sir Stamford Raffles’s. Lee Kuan Yew’s People’s Action Party has remained in power ever since; has made, some would say, quite drastically certain that it would do so. The emblem of the PAP is a cartoony lightning bolt striking within a circle; Reddi Kilowatt as the mascot of what is, in effect, a single-party capitalist technocracy.

Finance Data a State Secret

SINGAPORE: A government official, two private economists, and a newspaper editor will be tried jointly on June 21 for revealing an official Singaporean secret - its economic growth rate.

Business Times editor Patrick Daniel, Monetary Authority of Singapore official Shanmugaratnam Tharman, and two economists for regional brokerage Crosby Securities, Manu Bhaskaran, and Raymond Foo Jong Chen, pleaded not guilty to violating Singapore’s Official Secrets Act.

South China Morning Post, 4/29/93

Reddi Kilowatt’s Singapore looks like an infinitely more liveable version of convention-zone Atlanta, with every third building supplied with a festive party-hat by the designer of Loew’s Chinese Theater. Rococo pagodas perch atop slippery-flanked megastructures concealing enough cubic footage of atria to make up a couple of good-sized Lagrangian-5 colonies. Along Orchard Road, the Fifth Avenue of Southeast Asia, chocka-block with multi- level shopping centers, a burgeoning middle class shops ceaselessly. Young, for the most part, and clad in computer-weathered cottons from the local Gap clone, they’re a handsome populace; they look good in their shorts and Reeboks and Matsuda shades.

There is less in the way of alternative, let alone dissident style in Singapore than in any city I have ever visited. I did once see two young Malayan men clad in basic, global, heavy metal black - jeans and T-shirts and waist-length hair. One’s T-shirt was embroidered with the Rastafarian colors, causing me to think its owner must have balls the size of durian fruit, or else be flat-out suicidal, or possibly both. But they were it, really, for overt boho style. (I didn’t see a single “bad” girl in Singapore. And I missed her.) A thorough scan of available tapes and

CDs confirmed a pop diet of such profound middle-of-the-road blandness that one could easily imagine the stock had been vetted by Mormon missionaries.

“You wouldn’t have any Shonen Knife, would you?”

“Sir, this is a music shop.”

Although you don’t need Mormons making sure your pop is squeaky-clean when you have the Undesirable Propagation Unit (UPU), one of several bodies of official censors. (I can’t say with any certainty that the UPU, specifically, censors Singapore’s popular music, but I love the name.) These various entities attempt to ensure that red rags on the order of Cosmopolitan don’t pollute the body politic. Bookstores in Singapore, consequently, are sad affairs, large busy places selling almost nothing I would ever want to buy - as though someone had managed to surgically neuter a W.H. Smith’s. Surveying the science fiction and fantasy sections of these stores, I was vaguely pleased to see that none of my own works seemed to be available. I don’t know for a fact that the UPU had turned them back at the border, but if they had, I’d certainly be in good company.

The local papers, including one curiously denatured tabloid, New Paper, are essentially organs of the state, instruments of only the most desirable propagation. This ceaseless boosterism, in the service of order, health, prosperity, and the Singaporean way, quickly induces a species of low-key Orwellian dread. (The feeling that Big Brother is coming at you from behind a happy face does nothing to alleviate this.) It would be possible, certainly, to live in Singapore and remain largely in touch with what was happening elsewhere. Only certain tonalities would be muted, or tuned out entirely, if possible… .

Singaporean television is big on explaining Singaporeans to themselves. Model families, Chinese, Malay, or Indian, act out little playlets explicating the customs of each culture. The familial world implied in these shows is like Leave It To Beaver without The Beave, a sphere of idealized paternalism that can only remind Americans my age of America’s most fulsome public sense of itself in the mid-1950s.

“Gosh, dad, I’m really glad you took the time to explain the Feast of the Hungry Ghosts to us in such minutely comprehensive detail.”

“Look, son, here comes your mother with a nutritious low-cholesterol treat of fat-free lup cheong and skimmed coconut milk “

And, in many ways, it really does seem like 1956 in Singapore; the war (or economic struggle, in this case) has apparently been won, an expanded middle class enjoys great prosperity, enormous public works have been successfully undertaken, even more ambitious projects are under way, and a deeply paternalistic government is prepared, at any cost, to hold at bay the triple threat of communism, pornography, and drugs.

The only problem being, of course, that it isn’t 1956 in the rest of world. Though that, one comes to suspect, is something that Singapore would prefer to view as our problem. (But I begin to wonder, late at night and in the privacy of my hotel room - what might the future prove to be, if this view should turn out to be right?)

Because Singapore is one happening place, biz-wise. I mean, the future here is so bright…. What other country is preparing to clone itself, calving like some high-tech socioeconomic iceberg? Yes, here it is, the first modern city-state to fully take advantage of the concept of franchise operations Mini-Singapores! Many!

In the coastal city of Longkou, Shandong province, China (just opposite Korea), Singaporean entrepreneurs are preparing to kick off the first of these, erecting improved port facilities and a power plant, as well as hotels, residential buildings, and, yes, shopping centers. The project, to occupy 1.3 square kilometers, reminds me of “Mr. Lee’s Greater Hong Kong” in Neal Stephenson’s Snow Crash, a sovereign nation set up like so many fried-noodle franchises along the feeder-routes of edge-city America. But Mr. Lee’s Greater Singapore means very serious business, and the Chinese seem uniformly keen to get a franchise in their neighborhood, and pronto.

Ordinarily, confronted with a strange city, I’m inclined to look for the parts that have broken down and fallen apart, revealing the underlying social mechanisms; how the place is really wired beneath the lay of the land as presented by the Chamber of Commerce. This won’t do in Singapore, because nothing is falling apart. Everything that’s fallen apart has already been replaced with something new. (The word infrastructure takes on a new and claustrophobic resonance here; somehow it’s all infrastructure.)

Failing to find any wrong side of the tracks, one can usually rely on a study of the nightlife and the mechanisms of commercial sex to provide some entree to the local subconscious. Singapore, as might be expected, proved not at all big on the more intense forms of nightlife. Zouk, arguably the city’s hippest dance club (modelled, I was told, after the rave scenes in Ibiza), is a pleasant enough place. It reminded me, on the night I looked in, of a large Barcelona disco, though somehow minus the party. Anyone seeking more raunchy action must cross the Causeway to Johore, where Singaporean businessmen are said to sometimes go to indulge in a little of the down and dirty. (But where else in the world today is the adjoining sleazy bordertown Islamic?) One reads of clubs there having their licenses pulled for stocking private cubicles with hapless Filipinas, so I assumed that the Islamic Tijuana at the far end of the Causeway was in one of those symbiotic pressure-valve relationships with the island city-state, thereby serving a crucial psychic function that would very likely never be officially admitted.

Singapore, meanwhile, has dealt with its own sex industry in two ways: by turning its traditional red-light district into a themed attraction in its own right, and by moving its massage parlors into the Beverly Centers. Bugis Street, once famous for its transvestite prostitutes - the sort of place where one could have imagined meeting Noel Coward, ripped on opium, cocaine, and the local tailoring, just off in his rickshaw for a night of high buggery - had, when it proved difficult to suppress, a subway station dropped on top of it. “Don’t worry,” the government said, “we’ll put it all back, just the way it was, as soon as we have the subway in.” Needless to say, the restored Bugis Street has all the sexual potential of “Frontierland,” and the transvestites are represented primarily by a number of murals.

The heterosexual hand-job business has been treated rather differently, and one can only assume that it was seen to possess some genuine degree of importance in the national Confucian scheme of things. Most shopping centers currently offer at least one “health center” - establishments one could easily take for slick mini-spas, but which in fact exist exclusively to relieve the paying customer of nagging erections. That one of these might be located between a Reebok outlet and a Rolex dealer continues to strike me as evidence of some deliberate social policy, though I can’t quite imagine what it might be. But there is remarkably little, in contemporary Singapore, that is not the result of deliberate and no doubt carefully deliberated social policy.

Take dating. Concerned that a series of earlier campaigns to reduce the national birth rate had proven entirely too successful, Singapore has instituted a system of “mandatory mixers.” I didn’t find this particularly disturbing, under the circumstances, though I disliked the idea that refusal to participate is said to result in a “call” to one’s employer. But there did seem to be a certain eugenic angle in effect, as mandatory dating for fast-track yuppies seemed to be handled by one government agency, while another dealt with the less educated. Though perhaps I misunderstood this, as Singaporeans seemed generally quite loathe to discuss these more intimate policies of government with a curious foreign visitor who was more than twice as tall as the average human, and who sweated slowly but continuously, like an aged cheese.

Singapore is curiously, indeed gratifyingly devoid of certain aspects of creativity. I say gratifyingly because I soon found myself taking a rather desperate satisfaction in any evidence that such a very tightly-run ship would lack innovative elan.

So, while I had to admit that the trains did indeed run on time, I was forced to take on some embarrassingly easy targets. Contemporary municipal sculpture is always fairly easy to make fun of, and this is abundantly true in Singapore. There was a pronounced tendency toward very large objects that resembled the sort of thing Mad magazine once drew to make us giggle at abstract art: ponderous lumps of bronze with equally ponderous holes through them. Though perhaps, like certain other apparently pointless features of the cityscape, these really served some arcane but highly specific geomantic function. Perhaps they were actually conduits for feng shui, and were only superficially intended to resemble Henry Moore as reconfigured by a team of Holiday Inn furniture designers.

But a more telling lack of creativity may have been evident in one of the city’s two primal passions: shopping. Allowing for the usual variations in price range, the city’s countless malls all sell essentially the same goods, with extraordinarily little attempt to vary their presentation. While this is generally true of malls elsewhere, and in fact is one of the reasons people everywhere flock to malls, a genuinely competitive retail culture will assure that the shopper periodically encounters either something new or something familiar in an unexpected context.

Singapore’s other primal passion is eating, and it really is fairly difficult to find any food in Singapore about which to complain. About the closest you could come would be the observation that it’s all very traditional fare of one kind or another, but that hardly seems fair. If there’s one thing you can live without in Singapore, it’s a Wolfgang Puck pizza. The food in Singapore, particularly the endless variety of street snacks in the hawker centers, is something to write home about. If you hit the right three stalls in a row, you might decide these places are a wonder of the modern world. And all of it quite safe to eat, thanks to the thorough, not to say nitpickingly Singaporean auspices of the local hygiene inspectors, and who could fault that? (Credit, please, where credit is due.)

But still. And after all. It’s boring here. And somehow it’s the same ennui that lies in wait in any theme park, put particularly in those that are somehow in too agressively spiffy a state of repair. Everything painted so recently that it positively creaks with niceness, and even the odd rare police car sliding past starts to look like something out of a Chuck E. Cheese franchise… And you come to suspect that the reason you see so few actual police is that people here all have, to quote William Burroughs, “the policeman inside.”

And what will it be like when these folks, as they so manifestly intend to do, bring themselves online as the Intelligent Island, a single giant data- node whose computational architecture is more than a match for their Swiss- watch infrastructure? While there’s no doubt that this is the current national project, one can’t help but wonder how they plan to handle all that stuff without actually getting any on them? How will a society founded on parental (well, paternal, mainly) guidance cope with the wilds of X- rated cyberspace? Or would they simply find ways not to have to? What if, while information elsewhere might be said to want to be free, the average Singaporean might be said to want, mainly, not to rock the boat? And to do very nicely, thank you, by not doing so?

Are the faceless functionaries who keep Shonen Knife and Cosmo anti- feminism out of straying local hands going to allow access to the geography-smashing highways and byways of whatever the Internet is becoming? More important, will denial of such access, in the coming century, be considered even a remotely viable possibility by even the dumbest of policemen?

Hard to say. And therein, perhaps, lies Singapore’s real importance. The overt goal of the national IT2000 initiative is a simple one: to sustain indefinitely, for a population of 2.8 million, annual increases in productivity of three to four percent.

IT, of course, is “information technology,” and we can all be suitably impressed with Singapore’s evident willingness to view such technology with the utmost seriousness. In terms of applied tech, they seem to have an awfully practical handle on what this stuff can do. The National Computer Board has designed an immigration system capable of checking foreign passports in 30 seconds, resident passports in fifteen. Singapore’s streets are planted with sensor loops to register real-time traffic; the traffic lights are computer controlled, and the system adjusts itself constantly to optimize the situation, creating “green waves” whenever possible. A different sort of green wave will appear if a building’s fire sensor calls for help; emergency vehicles are automatically green-lighted through to the source of the alarm. The physical operation of the city’s port, constant and quite unthinkably complex, is managed by another system. A “smart-card” system is planned to manage billings for cars entering the Restricted Zone. (The Restricted Zone is that part of central Singapore which costs you something to enter with a private vehicle. Though I suspect that if, say, Portland were to try this, the signs would announce the “Clean Air Zone,” or something similar.)

They’re good at this stuff. Really good. But now they propose to become something else as well; a coherent city of information, its architecture planned from the ground up. And they expect that whole highways of data will flow into and through their city. Yet they also seem to expect that this won’t affect them. And that baffles us, and perhaps it baffles the Singaporeans that it does.

Myself, I’m inclined to think that if they prove to be right, what will really be proven will be something very sad; and not about Singapore, but about our species. They will have proven it possible to flourish through the active repression of free expression. They will have proven that information does not necessarily want to be free.

But perhaps I’m overly pessimistic here. I often am; it goes with the territory. (Though what could be more frightening, out here at the deep end of the 20th century, than a genuinely optimistic science fiction writer?) Perhaps Singapore’s destiny will be to become nothing more than a smug, neo-Swiss enclave of order and prosperity, amid a sea of unthinkable…weirdness.

Dear God. What a fate.

Fully enough to send one lunging up from one’s armchair in the atrium lounge of the Meridien Singapore, calling for a taxi to the fractal-free corridors of the Airtropolis.

But I wasn’t finished, quite. There’d be another night to brood about the Dutchman.

I haven’t told you about the Dutchman yet. It looks like they’re going to hang him.

Man Gets Death For Importing 1 Kg of Cannabis

A MALAYAN man was yesterday sentenced to death by the High Court for importing not less than 1 kg of cannabis into Singapore more than two years ago.

Mat Repin Mamat, 39, was found guilty of the offense committed at the Woodlands checkpoint on October 9, 1991, after a five-day trial.

The hearing had two interpreters.

One interpreted English to Malay while the other interpreted Malay to Kelantanese to Mat Repin, who is from Kelantan.

The prosecution’s case was that when Mat Repin arrived at the checkpoint and was asked whether he had any cigarettes to declare, his reply was no.

As he appeared nervous, the senior customs officer decided to check the scooter.

Questioned further if he was carrying any “barang” (thing), Mat Repin replied that he had a kilogram of “ganja” (cannabis) under the petrol tank.

In his defense, he said that he did not know that the cannabis was hidden there.

The Straits Times 4/24/93

The day they sentenced Mat Repin, the Dutchman was also up on trial. Johannes Van Damme, an engineer, had been discovered in custody of a false- bottomed suitcase containing way mucho barang: 4.32 kilograms of heroin, checked through from Bangkok to Athens.

The prosecution made its case that Van Damme was a mule; that he’d agreed to transport the suitcase to Athens for a payment of US$20,000. Sniffed out by Changi smackhounds, the suitcase was pulled from the belt, and Van Damme from the transit lounge, where he may well have been watching Beaver’s dad explain the Feast of the Hungry Ghosts on a wall-mounted Sony.

The defense told a different story, though it generally made about as much sense as Mat Repin’s. Van Damme had gone to Bangkok to buy a wedding ring for his daughter, and had met a Nigerian who’d asked him, please, to take a suitcase through to Athens. “One would conclude,” the lawyer for the defense had said, “that either he was a nave person or one who can easily be made use of.” Or, hell, both. I took this to be something akin to a plea for mercy.

Johannes Van Damme, in the newspaper picture, looks as thick as two bricks.

I can’t tell you whether he’s guilty or not, and I wouldn’t want to have to, but I can definitely tell you that I have my doubts about whether Singapore should hang him, by the neck, until dead - even if he actually was involved in a scheme to shift several kilos of heroin from some backroom in Bangkok to the junkies of the Plaka. It hasn’t, after all, a whole hell of a lot to do with Singapore. But remember “Zero Tolerance?” These guys have it.

And, very next day, they announced Johannes Van Damme’s death sentence. He still has at least one line of appeal, and he is still, the paper notes, “the first Caucasian” to find his ass in this particular sling.

“My ass,” I said to the mirror, “is out of here.” Put on a white shirt laundered so perfectly the cuffs could slit your wrists. Brushed my teeth, ran a last-minute check on the luggage, forgot to take the minibar’s tinned Australian Singapore Sling home for my wife.

Made it to the lobby and checked out in record time. I’d booked a cab for 4 AM, even though that gave me two hours at Changi. The driver was asleep, but he woke up fast, insanely voluble, the only person in Singapore who didn’t speak much English.

He ran every red light between there and Changi, giggling. “Too early policeman….”

They were there at Changi, though, toting those big-ticket Austrian machine pistols that look like khaki plastic waterguns. And I must’ve been starting to lose it, because I saw a crumpled piece of paper on the spotless floor and started snapping pictures of it. They really didn’t like that. They gave me a stern look when they came over to pick it up and carry it away.

So I avoided eye contact, straightened my tie, and assumed the position that would eventually get me on the Cathay Pacific’s flight to Hong Kong.

In Hong Kong I’d seen huge matte black butterflies flapping around the customs hall, nobody paying them the least attention. I’d caught a glimpse of the Walled City of Kowloon, too. Maybe I could catch another, before the future comes to tear it down.

Traditionally the home of pork-butchers, unlicensed denturists, and dealers in heroin, the Walled City still stands at the foot of a runway, awaiting demolition. Some kind of profound embarassment to modern China, its clearance has long been made a condition of the looming change of hands.

Hive of dream. Those mismatched, uncalculated windows. How they seemed to absorb all the frantic activity of Kai Tak airport, sucking in energy like a black hole.

I was ready for something like that… .

I loosened my tie, clearing Singapore airspace.


William Gibson’s Neuromancer made cyberpunk a household word. His new novel, Virtual Light, was just published. “Disneyland” is his first major piece of non-fiction.

Copyright © 1993-2004 The Condé Nast Publications Inc. All rights reserved.

Copyright © 1994-2003 Wired Digital, Inc. All rights reserved.

The Japanese Have Grown Dramatically Poorer

Wolf RichterTestosterone Pit

“Pauperization,” the word, became infamous when three executives of huge consumer products companies voiced it as the new challenge in Europe.

To market their products successfully, they changed their commercial strategies and applied what worked in poor countries [The “Pauperization of Europe”].

In Japan, a similar process has hounded the economy, but for much longer. And nothing shows this better than the plight of the ubiquitous but hapless “salaryman.”

He is a cultural phenomenon. He enters the formidable corporate hierarchy upon graduation and struggles within it till retirement. Most of the time, the career trajectory flattens sooner or later. Often enough the aging salaryman is shuffled aside to a “window job” where he might not even have the tools to work, such as a phone.

His life is defined by commutes in packed trains and long hours at work. After work, at restaurants and bars, the informal part of work begins with clients or coworkers to hash out inter-office issues, price differences, design problems, or product failures under the influence of alcohol—the official excuse to be direct in a culture that prizes vagueness.  

In return for his labors, the salaryman hands his paycheck to his wife. She manages the household budget, pays the bills, buys what is needed, and makes investment decisions. Stories abound of the Japanese housewife who blew the couple’s lifesavings on leveraged investments that no one understood. And she’s known for her impeccably wrong timing [The Japanese Are Dumping Their Gold].

She also gives her husband a monthly allowance, kozukai, to buy lunch, dinner, drinks, etc., though regular visits to “soapland,” due to their higher costs, would have to be covered by special company cash bonuses. Now a lot of these structures are loosening up, and lifetime employment is no longer the ground rule, nor is marriage, but for those who end up married, especially if the wife stays at home, the allowance still applies.

In 1979, Shinsei Bank started one of the most insightful polls into consumer spending habits, or rather into male consumer spending ability—the Salaryman Pocket Money Survey. Back then, the average salaryman’s allowance was ¥47,175 ($590) per month. By 1990, the peak of the bubble when money grew on trees, wives indulged their husbands with an allowance of ¥77,725 ($971) per month. Then it crashed. By 2004, it landed on the ¥40,000 mark.

This year? ¥39,756.

And those with kids receive ¥15,000 less than those without kids.

The bursting of the Japanese bubble, now in its third decade, has ravaged salaries, bonuses, household budgets, and thus allowances—and spending. The zero-interest-rate policy that the Bank of Japan has perfected, extensive quantitative easing, and two decades of stimulus budgets that have left Japan saddled with the worst debt-to-GDP ratio in the world … all conspired against the hapless salaryman. He works harder and longer than ever before, for less pay, and even his lunch money is getting cut.

In 1992, the average salaryman spent ¥746 ($9.32) on lunch; this year, ¥510 ($6.38). Back then, when everybody was still assuming that this was just a temporary lull in the excitement, the average salaryman took an almost leisurely 27.6 minutes to eat lunch; this year, he inhaled it in 19.6 minutes. After-work drinking took the biggest hit: in 2001, the average salaryman forked over ¥6,160 ($77) when he went out to drink. That’s a serious amount of beer. Hence the image of a midnight train stuffed with drunken and barfing guys. This year, he spent only ¥2,860 ($35) per drinking excursion.

The beer industry caught the brunt of it. Beer shipments, a closely watched index based on data from the five major brewers, dropped by 3.7% in 2011, the seventh straight year of declines. Only 442.39 million cases were shipped, the lowest EVER in recorded Japanese beer history. But this August, a miracle occurred. For the first time in years, there was an uptick in beer shipments for the month of 2.8%.Where there is beer, there is hope.

Or maybe not. Eating out got slammed. Again. In 2010, 22.6% of the salarymen said they didn’t eat out at all; in 2011, 35.8% weren’t eating out; and this year, 37.9%. If this trend keeps going, it will destroy the core of Japanese social life. (But those are the lucky ones. The number of welfare recipients set a new record: 2.115 million individuals and 1.543 million households, according to the Ministry of Health, Labor, and Welfare.)

This has got to be the icing on the Japanese cake. The website of the Japanese Ministry of Finance, more specifically the FAQ page on government bonds, has been catapulted to stardom on Facebook and Twitter. It posted the question: “In case Japan becomes insolvent, what will happen to government bonds?” Incredibly, it answers with a terse action plan for when the Big S hits the fan. Read…. Japanese Ministry of Finance To Japanese Bondholders: You’re Screwed!



Read more: http://www.testosteronepit.com/home/2012/9/28/the-pauperization-of-japan.html#ixzz27qTdNS76

QE3 = Operation Screw

By:  Peter Schiff 
Friday, September 14, 2012

With yesterday’s Fed decision and press conference, Chairman Ben Bernanke finally and decisively laid his cards on the table. And confirming what I have been saying for many years, all he was holding was more of the same snake oil and bluster. Going further than he has ever gone before, he made it clear that he will be permanently binding the American economy to a losing strategy. As a result, September 13, 2012 may one day be regarded as the day America finally threw in the economic towel.

Here is the outline of the Fed’s plan: buy hundreds of billions of home mortgages annually in order to push down mortgage rates and push up home prices, thereby encouraging people to build and buy homes and spend the extracted equity on consumer goods. Furthermore, the Fed hopes that ultra-cheap money will push up stock prices so that Wall Street and stock investors feel wealthier and begin to spend more freely. He won’t admit this directly, but rather than building an economy on increased productivity, production, and wealth accumulation, he is trying to build one on confidence, increased leverage, and rising asset prices. In other words, the Fed prefers the illusion of growth to the restructuring needed to allow for real growth.

The problem that went unnoticed by the reporters at the Fed’s press conference (and those who have written about it subsequently) is that we already tried this strategy and it ended in disaster. Loose monetary policy created the housing and stock bubbles of the last decade, the bursting of which almost blew up the economy. Apparently for Bernanke and his cohorts, almost isn’t good enough. They are coming back to finish the job. But this time, they are packing weaponry of a much higher caliber. Not only are they pushing mortgage rates down to historical lows but now they are buying all the loans!

Last year, the Fed launched the so-called “Operation Twist,” which was designed to lower long-term interest rates and flatten the yield curve. Without creating any real benefits for the economy, the move exposed US taxpayers and holders of dollar-based assets to the dangers of shortening the maturity on $16 trillion of outstanding government debt. Such a repositioning exposes the Treasury to much faster and more painful consequences if interest rates rise. Still, the set of policies announced yesterday will do so much more damage than “Operation Twist,” they should be dubbed “Operation Screw.” Because make no mistake, anyone holding US dollars, Treasury bonds, or living on a fixed income will have their purchasing power stolen by these actions.

Prior injections of quantitative easing have done little to revive our economy or set us on a path for real recovery. We are now in more debt, have more people out of work, and have deeper fiscal problems than we had before the Fed began down this path. All the supporters can say is things would have been worse absent the stimulus. While counterfactual arguments are hard to prove, I do not doubt that things would have been worse in the short-term if we had simply allowed the imbalances of the old economy to work themselves out. But in exchange for that pain, I believe that we would be on the road to a real recovery. Instead, we have artificially sustained a borrow-and-spend model that puts us farther away from solid ground.

Because the initials of quantitative easing - QE - have brought to mind the famous Queen Elizabeth cruise ships, many have likened these Fed moves as giant vessels that are loaded up and sent out to sea. But based on their newly announced plans, the analogy no longer applies. As the new commitments are open-ended, quantitative easing will now be delivered via a non-stop conveyor belt that dumps cheap money on the economy. The only variable is how fast the belt moves.

Fortunately, the crude limitations of the Fed’s only policy tool have become more apparent to the markets. If you must stick with the nautical metaphors, QE3 has sunk before it has even left port. The move was explicitly designed to push down long-term interest rates, but interest rates spiked significantly in the immediate aftermath of the announcement. Traders realize that an open-ended commitment to buying bonds means that inflation and dollar weakness will likely destroy any nominal gains in the bonds themselves. To underscore this point, the Fed announcement also caused a sharp selloff in Treasuries and the dollar and a strong rally in commodities, especially precious metals.

Given that 30-year fixed mortgages are already at historic lows, there can be little confidence that the new plan will succeed in pushing them much lower, especially given the upward spike that occurred in the immediate aftermath of the announcement. Instead, Bernanke is likely trying to provide the confidence home owners need to exchange fixed-rate mortgages for lower adjustable rate loans - which would free up more cash for current consumer spending. He is looking for homeowners to do their own twist. If he succeeds, more homeowners will be vulnerable to increasing rates, which will further limit the Fed’s future ability to increase rates to fight rising prices.

The goal of the plan is to create consumer purchasing power by raising home and stock prices. No one seems to be considering the likelihood that unending QE will fail to lift bond, stock, or home prices, but will instead bleed straight through to higher prices for food, energy, and other consumer staples. If that occurs, consumers will have less purchasing power as a result of Bernanke’s efforts, not more.

The Fed decision comes at the same time as the situation in Europe is finally moving out of urgent crisis mode. While I do not think the ECB’s decision to underwrite more sovereign debt from troubled EU members will work out well in the long term, at least those moves have come with some German strings attached [For more on this, see John Browne’s article from earlier this week]. As a result, I feel that the attention of currency traders may now shift to the poor fundamentals of the US dollar, rather than the potential for a breakup of the euro.

In the meantime, the implications for American investors should be clear. The Fed will try to conjure a recovery on the backs of currency debasement. It will not stop or alter from this course. If the economy fails to respond to the drugs, Bernanke will simply up the dosage. In fact, he is so convinced we will remain dependent on quantitative easing that he explicitly said he won’t turn off the spigots even if things noticeably improve. In other words, the dollar is screwed.



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