This is how bad things are getting for Sony

Started Jan 18, 2013 | Discussions thread
topstuff
Senior MemberPosts: 1,048Gear list
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A lot of so called "experts" here...
In reply to OntarioJohn, Jan 21, 2013

.. with the greatest of respect, a lot of people do not understand how Japanese capitalism works.

The important thing about debt in this situation, is who holds it , where it ranks in the capital structure and how hard is it to service the coupon payments.

In Sony's case, I am not that worried about the debt. This is true of several of the large Japanese conglomerates. Debt is invariably held by domestic pension funds (public and private), other Government departments and, of course, the Japanese public.

These groups are not going to call the debt in. And they are happy to receive a modest coupon.

Capitalism, Japanese style, is the capitalism of alliances. These are business "groupings" where apparently separate institutions treat each other as members of the same family. They provide each other with mutual support. They do not kill each other off when they are weak. Its called "Keiretsu". It is why Sony now owns a big chunk of Olympus. Rather than watch Olympus fall and then get their assets cheap, Sony chose to support them to keep them alive. Like a brother helping another.

It can function rather differently to western capitalism. Too many western credit analysts can't get their head around it.

One of the much overlooked aspects of Japan over the past 20 years is the function of their society. Westerners talk about economic stagnation and of "lost decades", but fail to recognise that even though Japanese economic growth has stalled, Japan has been able to protect its people from the worst ravages of recession. Poverty is not as common as it is in the US or EU. Unemployment has risen for sure, but social infrastructure and society as a whole, pulls together. Japan may have had poor economic performance, but their society remains healthy. Keiretsu is a part of why they have managed to do this.

Sony is not about to disappear. Of course the business needs to reform and they are doing just that. But it is absurd to think that Sony will fall. The Japanese government, and the Japanese people, are too invested in the business to let that happen. They are'nt about to call in the debts. And in a zero interest rate environment, even modest income coupons will satisfy Mrs Watanabe.

You could argue that this system is partly responsible for why Japanese companies have lost their way and I have some sympathy for this argument. They have certainly not been innovative enough and too conservative compared to their Korean neighbours, for example. This is why it is good to see Sony making decisions like these. And why it is good to see Sony leading innovation. It is what they used to do - and now they are doing it again. It is good to have Sony back.

In terms of the OP, Goldman Sachs don't own their buildings either. They sold them to Middle East Gulf countries so they could pocket the cash.

Much of maintown US and Europe is owned by Middle East and Asia these days. We are all tenants in our rented HQ's.

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