Book launchWednesday 25 September 2013
6:00pm – 7:00pm
The Road to Recovery – How and Why Economic Policy Must Change
Drinks reception: 7:00pm – 8:00pm
Daiwa Foundation Japan House, 13/14 Cornwall Terrace, Outer Circle, London NW1 4QP
Organised by The Daiwa Anglo-Japanese Foundation
By Andrew Smithers
Published by Wiley
The world economy underperforms despite massive attempts at stimulus. Governments and central banks have the wrong policies because they do not understand today’s problems. Those who advocate stimulus, whether fiscal or monetary, assume that the problems are cyclical and thus temporary. But recovery in Japan, the UK and the US is inhibited by structural problems, which will not be solved by trying to boost demand.
In each country companies are running huge and persistent cash surpluses in place of their normal deficits. Budget deficits have risen to prevent these surpluses, causing depression. The key problem for Japan is excessive provisions for depreciation, in the UK and the US it is high profit margins and low investment which result from a major change in the way corporate managements are paid and thus in their incentives. Governments, central bankers and the economists from whom they take advice have failed to understand this. Neither Japan, the UK nor the US will be able to achieve stable growth until the cash surpluses of companies change to deficits. In Japan this requires a major reform of depreciation allowances and corporation tax. The UK and the US face the more difficult task of changing corporate incentives. Deficits cannot be reduced until corporate cash surpluses turn to deficits and current policies will not achieve this.
*The book was available at the event for the special price of £13
Presentation by Mr Andrew SmithersAbout the contributors
Andrew Smithers
Andrew Smithers started Smithers & Co. Ltd. in 1989 and now the firm provides advice on international asset allocation to more than 100 clients worldwide, covering the economies, stock, bond and currency markets of Japan, the US and major European countries. It is particularly well known for its work on the Japanese economy. Prior to starting his own firm, Andrew was at S.G.Warburg & Co. Ltd. where he ran the investment management business for some years. He read Economics at Cambridge, first visiting Japan in 1968 and living there from 1986 to 1989. He has been a regular contributor to the Nikkei Veritas ‘Market Eye’ column (until Sept 2011) and to the London Evening Standard and Japan’s Sentaku magazine. His publications include: Valuing Wall Street with Stephen Wright, (McGraw-Hill, 2000) and Japan’s Key Challenges for the 21st Century with David Asher, published in Japanese by Diamond Press in 1999. His book Wall Street Revalued – Imperfect Markets and Inept Central Bankers was published by Wiley in July, 2009. He is also the author of Chapter 6, “Can We Identify Bubbles and Stabilize the System?” in The Future of Finance: The LSE Report, published by The London School of Economics and Political Science in September 2010. He is a Trustee of the Daiwa Anglo-Japanese Foundation, a Fellow of CFA (UK) and member of the Advisory Board for the Centre for International Macroeconomics and Finance (CIMF) at Cambridge University.