Cryptocurrency Stolen in Silent Heist

The Japanese press are full of headlines about a massive and silent bank robbery in Tokyo.

Asahi newspaper reports that around 58 billion yen (approx. $533 million) was taken by thieves from a vault in Shibuya, Tokyo. The money was not in cash but in the form of a cryptocurrency called NEM.

The cryptocurrency tokens were being traded through an agency called Coincheck. Its shocked bosses appeared before the cameras at a late night press conference at which they explained that millions of NEM tokens were removed from digital wallets and “sent illicitly outside the company’s system.” In other words, they were pinched.

Bigger than Mt Gox

All of this will add to the widespread view that trading in cryptocurrencies is sleazy, dangerous and out of control. It’s not the first big robbery in Japan. In 2014, millions of Bitcoins were taken from an exchange based in Tokyo called Mt. Gox, which soon went bust.

Since then, the overall value of digital tokens being exchanged around the world has increased significantly, with many investors hoping to make a quick profit from their deals. In Japan, this high risk aspect of the trading seems to be the allure. It’s not seen as an investment but a rather silly form of gambling, rather like pachinko.

Pop song

There is even an all-female cryptocurrency-themed band called Kasotsuka Shojo, which literally translates as Virtual Currency Girls. Each member of the band represents a different cryptocurrency, from Bitcoin to Ethereum to Litecoin.

“We want to promote the idea through entertainment that virtual currencies are not just a tool for speculation but are a wonderful technology that will shape the future,” Rara Naruse, an 18-year-old singer with the group is quoted as saying.

This rather implausible theory is supported by Kasotsuka Shojo’s first single, which is called The Moon, and Virtual Currencies and Me. The song includes a few timely lines advising on online security.

Is Asia to blame?

The BBC’s Asia Business Reporter Karishma Vaswani recently asked if Asia is driving the Bitcoin craze. She revealed that a one point Chinese investors made up at least 80% of Bitcoin ownership.

But China became worried about the outflow of funds into the market, so it effectively banned cryptocurrencies by outlawing initial coin offerings, or ICOs, which are basically public share offerings that are invested in via the use of digital currencies.

That left Japan has a haven for the trade, now celebrated in song.

But as news of a cyber robbery flashes through the media, it probably won’t be long the conservative financial authorities in Japan try to halt a trade which is losing all financial credibility.

“My company’s a goose” says Japan’s richest man

Who is Japan’s best communicator? People often tell me it is the nation’s richest businessman, Masayoshi Son. As a public speaking coach, I can’t promise to make my clients rich like him. But I do encourage them to listen to both what he says and how he says it. In this blog, I’ll share with you a simple principle which Mr Son uses when explaining his ideas to international audiences.

 

Golden eggs

I have heard Masayoshi Son give brilliant speeches in both English and Japanese. He has a particular skill with visual aides. At one investor briefing, for example, he showed his audience a slide with a picture of a goose. “My company is like the bird of the legend that produces golden eggs,” he explained. That slide was so striking that the Economist published a whole article about three years later.

Softbank has just bought a controlling stake in the taxi firm Uber. That deal is worth more than a billion dollars. It is also said to be preparing to float the Japanese division of its telecoms business on the Tokyo Stock Exchange for around 18 billion dollars. And it runs a 100 billion dollar “Vision Fund” focussed on investing in what Mr Son calls “The Internet of Things.”

Learning from the Job

Watching Mr Son speak, I have concluded that he has learned his craft from another brilliant communicator – Steve Jobs, the co-founder of Apple. Mr Jobs studied the art of public speaking very carefully and this helped him transform Apple into one of the world’s most profitable and successful companies in the world. I am sure Mr Son has read the book by Carmine Gallo who coached Steve Jobs.

Keeping it simple

The key point to remember is that audiences do not want speakers to show them slides with lots of words written on them. Japanese audiences may be too polite to complain but when bored, they simply stop paying attention and fall asleep!

Wordy slides undermine a speaker’s credibility and suggest that he does not really know the material. Audiences find it frustrating if they are able to read the words on the slide faster than the speaker can say them.

When I asked an American public speaking coach based in Tokyo for his advice, he said the slides of a presentation should tell a story. The first group of slides can form chapter one, the second group will form chapter two and in the end there will be a conclusion.

He reminded me that some Japanese people want to be able to leave a meeting or a presentation with a single deck of slides, printed out on pieces of paper, which contain all the information they have heard. They might need to show the print-out of the slides to a colleague or to a superior after the meeting.

Double deck

So, which is better in Japan? A big detailed deck of slides or a small, simple set? The American public speaking coach says:

“What we do, is we create one detailed deck which is printed out and given to the people to take away with them. However, we also create another deck which is much simpler, which we project on the screen during the presentation itself.

“Of course, it takes time to create two different decks of slides but it avoids the problem of having too much detail on the screen when the speaker is making his presentation.”

That means, you can make slides which are simple and have a strong visual impact. A goose laying a golden egg is a perfect example.

Is the party over for the Bank of Japan?

Can you imagine a party thrown by the Bank of Japan at which its officials encourage guests to become roaring drunk?

That was the clever metaphor used by reporter Patti Domm of CNBC to explain a hugely important issue with is hidden behind a horrible, jargonistic name: Quantitative & Qualitative Easing (QQE).
Party time

In an excellent piece of journalism, Ms Domm invited her readers to picture the Bank of Japan’s headquarters in Tokyo as somewhere like the Playboy Mansion in California. (It is actually an imposing castle-like building in Mitsukoshi Mae, filled with sober civil servants.)

“The Bank of Japan is seen as the last grown-up in the room actively filling the global liquidity punch bowl with both hands,” declared Ms Domm.

That brought a smile to my face. Another way to explain the concept “creating liquidity” is to suggest that central banks “print more money.” Of course, they do arrange for the printing of bank notes but their QE policies are based upon the acquisition of government debt through the purchase of assets.

Flurry of panic

The Bank of Japan appeared to be continuing this asset buying programme with enthusiasm until last week, when it modestly trimmed its purchases of long-term government bonds by about $20 billion.

As Ms Domm explained on CNBC: “A slight tweak to its bond-buying program caused a flurry across financial markets, sparking speculation that the BoJ was joining the Federal Reserve and European Central Bank in cutting back on asset purchases, a move that could ultimately help drive up global interest rates.”

It could also be a sign that the BoJ is feeling more optimistic about Japan’s economic outlook this year. There have been signs that growth will be sustained and deflation, caused by falling prices, is under control.

Forget the consequences

The problem with buying bonds is that is it raises the national debt. Sometimes, the scenario does indeed seem to resemble the actions of irresponsible drinkers at a wild party, as the government borrows vast sums of money from the central bank without a moment’s thought as to the consequences.

The Americans are also hooked on the punch bowl. The Bank of Japan has been helping America to get deeper into debt by buying US Treasury bonds. By October 2017, Japan owned $1.1 trillion dollars worth of US Treasury bonds, accounting for more than five percent of the total Federal debt. America owes a similar sum to China.

The king of debt

“I’m the king of debt. I love debt,” Donald Trump proudly told CNN during his election campaign. As a New York businessman, he thrived on taking financial risks and borrowing money to grow his empire. Now he’s running up record levels of national debt for the United States.

“Beautiful” tax cuts

The Centre for Economic Policy and Research in Washington projects that the national debt will rise by a further $1.5 trillion over the next decade, largely due to a tax cut approved by Congress in December. President Trump said it fulfilled a promise to “give the American people a big, beautiful tax cut for Christmas.” But like many extravagant presents, the real cost will have to be reckoned with long after it is delivered.

Why don’t Japanese want more pay?

In most countries, people clamour for a pay rise. For example in Germany this week, eighty manufacturing companies have been hit by strikes as unions demand a six percent increase in pay and a cut in people’s working hours.

 

But in Japan, it seems, there is not such a big demand for more money at the moment and strikes are virtually extinct. For the past few years, most people’s ordinary wage increases have been tiny, or even zero. Recently, many of Japan’s largest companies have started making record profits but there are still only a few organisations offering to share that profit with their workers.

Prime Minister Abe wants to change that. He has repeatedly called on trade unions to press employers to raise wages by at least three percent, saying it will be good for the economy.

Who’s to blame?

Why do they seem reluctant to do so? One possibility is that companies are holding back because they remain cautious about the overall economic situation. Although Japan’s economy is growing, it is not growing at a particularly rapid rate, especially in comparison with the rest of Asia. Deflation caused by falling prices remains a problem. When prices fall, people’s spending power goes up, reducing their need for a pay rise.

Frugal bosses do not appear to be the issue here, either. The powerful Keidanren business federation has said it will encourage companies to meet Mr Abe’s suggestion of a three percent wage increase. However, the Keidanren only represents the big companies. Small businesses, like farms and little shops which serve Japan’s domestic market, may simply not have the funds to raise people’s pay.

Overtime and bonuses

The Financial Times Tokyo Bureau chief Robin Harding observes that in recent years, union negotiators have often prioritised improvements in working conditions, such as ending extreme overtime, over higher pay.

Another point is that many people in Japan receive a substantial chunk of their income in the form of a bonus, usually paid in the spring. This can account for as much as a third of annual earnings. A big bonus can make people feel much more rewarded by their employer than a fractional rise in their monthly pay.

The spirit of kaizen

The philosophy of kaizen influences the way many Japanese people feel about their work. Kaizen advocates continuous improvement and encourages companies to pay people fairly for their work. However, in the kaizen mindset, large rewards and incentives do little to promote loyalty and diligence. What people really want is to feel valued, to be heard and to make a contribution. In his book Spirit of Kaizen, author Robert Maurer says that large performance incentives “tend to disrupt intrinsic motivation” and advises against an overwhelming discrepancy in pay between executives and line workers.

Hitachi’s debate

Hitachi’s chief executive Toshiaki Higashihara, quoted by Stanley Wright of the Reuters news agency website, said: “I want to debate this and do as much as possible to make sure disposable incomes rise. I approve of raising disposable incomes because in the end this will improve the economy by raising consumption.”

His little phrase “I want to debate this” is important.  Although Mr Higashihara is the CEO of a company which employs tens of thousands of people worldwide, he avoids arbitrary decisions and instead debates remuneration policy with representatives of the company’s staff. Some of them may well take the kaizen view that their level of pay at the end of each month is not the most important aspect of their job.

Investment Boss is Betting on Japan Boom

One of the most influential women in international finance has announced that Japan will be at the forefront of her investment strategy this year.
Sonja Laud, who is the head of equity investment at Fidelity International, says that Japan stands out as “a very attractive opportunity.”

She says the main attraction is Japan’s recent return to economic growth but that “lots of factors are coming together” including healthy profits at Japanese companies. Ms Laud oversees $16 billion in assets at Fidelity.

Cash rich

She told the BBC’s flagship radio news programme Today that Japanese companies are rich with cash at the moment as a result of Abenomics and their increased profitability, so therefore they should be able to drive the economy forward in 2018.

The Tokyo stock market has recently risen as corporate profits swell, led by export growth. This prompted a wave of optimism towards the end of last year as Japan enjoyed its longest growth streak this millennium. The credit agency Moody’s confirmed Japan’s A1 rating, its highest possible score, in December.

Wage conundrum

Yet there remain problems linked to deflation and low wage increases. Jane Foley, senior currency strategist at Rabobank, has described that situation as “a real conundrum.”

She says: “Japan was one of the big surprise stories when it came to growth last year. Yet inflation remains extremely low and this is despite the fact that there is such a shortage of labour.”

Japan was one of the big surprise stories when it came to growth last year.” Jane Foley, Rabobank

By contrast in the United States, which also has a tight labour market, wages have been rising and this led to a surge of optimism which helped the US stock market reach record highs. The US central bank, the Federal Reserve, is therefore easing out of its money-printing programme known as QE.

Inflation dreams

Prime Minister Shinzo Abe and the Bank of Japan hope that wages will also rise in Japan because of the labour shortage and this will push inflation upwards. The Bank of Japan has an inflation target of two percent, although most economists say this is currently far off. As a result, the Bank of Japan is sticking with QE and negative interest rates.

Jane Foley of Rabobank told the BBC: “The Bank of Japan is so far from its inflation target that it’s going to be difficult for it to withdraw from the QE programme. Yet back in November, governor Haruhiko Kuroda said he was worried about the side effects of QE, one of which is that yields on interests rates are so low that banks won’t even lend money any more. That would be the exact opposite of what the Bank of Japan wants.”