(Mostly fictional) cockroaches in Japanese markets | Today’s news
You may have read that Japanese leader Sanae Takaichi has a new boyfriend.
“Japan PM: I’m so lonely I befriended a cockroach,” read a headline in Britain’s Telegraph this week. One tweet of the article received more than 8 million views.
It’s a great story with one problem: It’s not even remotely true.
The saga stems from a tweet by Takaichi, in which she said that while her official residence has a reputation for being haunted, it wasn’t a ghost she was screaming about, but a cockroach. Invoking her belief in reincarnation, she could not bring herself to kill the vermin; she expressed mild regret when she discovered that her staff had arranged the extermination.
Most of the headlines in the Tokyo media reported on how bizarre the international coverage was, with one asking “translation error or mockery?”
Who cares, you might be asking? After all, this is Japan, a country where you can write anything and worry later if it’s true, from fictional eye-lickers to supposed smile trainers wearing a Covid mask. Normally these stories don’t have much impact.
Except as this episode demonstrates, official communications can be misread, whether intentionally or not. Consider what this means for the increasingly sensitive yen and bond markets.
As the Bank of Japan retreats from the bond market, foreign investors are increasingly dictating prices. They own only about 13% of outstanding Japanese government bonds, but now account for up to 30% of purchases of the benchmark 10-year bond and dominate the short-term bill market. The foreign exchange market is, of course, international, with the carry trade and recent US interventions adding to this interest.
But the government still communicates as if domestic institutions are the only audience that matters. It was caught off guard earlier this summer when international investors misinterpreted early leaks of a key domestically focused economic document as implying profligate spending and opposition to the BOJ’s independence. Revenues rose in response.
Communication must be tailored with this kind of response in mind. Many are simply not familiar with the reality of Japan’s debt situation – that while gross debt is high, its assets are also high, meaning that net debt is much more manageable; that its primary budget deficit is now one of the lowest among its peers; that debt service cost forecasts include both interest and principal, unlike the net interest figures normally reported for the US.
I have met some who think that its entire ¥370 trillion public-private investment plan will be financed by a new issue of JGBs. Not only is this completely wrong, even if the administration wanted to spend that much, the practical constraints mean that it would be completely impossible. It’s like betting on land prices and expecting the first Trump administration to actually build a wall.
With the eyes of the world on Japan in a way they have rarely looked before, the old communication model – in which news breaks through the domestic press first, with international response only after the fact, if it is even considered – needs to be overhauled.
A narrative is growing that sees the prime minister as a spendthrift in a country already on the fiscal ropes. This presumed imminent collapse is now an increasingly significant explanation for the yen still testing 160, despite a narrowed rate differential with the US, the BOJ announcing an increased rate of hikes and the prospect of an easing of Federal Reserve tightening.
“Is Japan a bust? Reading the recent coverage makes you think so,” is the accurate summary of Nicholas Smith, a veteran Japan strategist who recently left CLSA, referring to the often hyperbolic reports.
The Prime Minister also faces strong domestic sentiment, deeply rooted in the Treasury and local commentators, who are warning of looming fiscal calamity. It is easy to grip and thus very easy to travel overseas. If it wants space to realize its ambitious growth plans, it has to fight for it.
AI translation may mean that language is increasingly a solved problem. But while AI can provide context—interpreting this cockroach anecdote or shedding light on the reality of Japan’s fiscal situation—it won’t do so unless asked. Providing these details is the job of the Takaichi government; hoping that understanding will emerge is a fool’s errand.
Thanks to our staff, you may never have to call an exterminator again. But he needs someone else: a specialist in international communication.
More from Bloomberg:
I apologize for contributing to the more frequent mentions of the dreaded insect, which is already making far too many headlines after India’s Cockroach Janta Party and Jamie Dimon’s market warning last year.
To fully explain the context: After learning about extermination, she expresses regret at the disappearance or death of a living creature and has just explained her reluctance to kill insects. The “lonely” part might be better translated as, “I felt relieved, though it was also a little wistful, a little sad.” He does not say, “The cockroach was my companion, and now I am lonely.”
This column reflects the personal views of the author and does not necessarily reflect the views of the Editorial Board or Bloomberg LP and its owners.
Gearoid Reidy is a Bloomberg Opinion columnist covering Japan and Korea. He previously led the North Asia breaking news team and was deputy bureau chief in Tokyo.
This article was generated from an automated news agency source without text modification.
