Bill Bonner is thinking long term and does have some interesting points.

Long-term he may be right. I have reservations though, as does my wife who is Japanese. Her family (typical middle class) report no improvement at all over the last 10 years. None. If anything, things are getting worse.

Japan has a peculiar problem that could hamstring it in the future. Europe and North America both have large immigrant populations to offset the declining birthrate that comes with industrial society. To one degree or another they encourage immigration. Japan does not. It has the same declining birthrate, but no population growth to offset falling demand.

There's an irony here. Whereas cultural values underpinned the "Japanese Miracle" this time around cultural values hold them back. The option of allowing Chinese and Korean immigration runs headlong into centuries of prejudice that runs very deep. And so population and the internal economy will continue to decline until they come to grips with that issue.

Meanwhile, on the export side, Japan has to compete with China, Korea and Brazil who are catching up fast in terms of quality, and have much lower costs.

On a strictly valuation basis, Bonner may be right. Japanese companies could be bought outright and turned around (or broken up) as in the West, but how far can that run before their govt. gets nervous about foreign ownership? The other side of his argument - a weakening of the Yen leading to improved competition - completely misses the problem of repatriation. If you have a 15% investment gain but the currency drops 20%, you are underwater. You need both currency and market on your side or it just isn't worth it - at least that's how I look at it:)

ebear