Financial wealth vs physical wealth

Been reading about the commodity bubble and crash of 2008. It is interesting to try to understand how the motion of money that causes the commodity bubble. At first, I was thinking that money can move into a commodity class (as in be stored) but in reality, someone is exchanging a commodity for that money, which breaks that model. I wanted to model a change in price as a function of the amount of money that goes into an equity, but that doesn't seem to be the case. What basically happens is that the money is exchanged for a commodity or equity and the transaction ends there.

The value associated with an equity is the result of it's instantaneous trading price and there is a disconnect when the value of the equity is tied directly into the "real" money supply and the physical commodity.

Assume a closed system of $1 billion dollars and 100,000,000 tonnes of copper:

• Let the price of copper be $10/tonne, the total value of this market is $2 Billion
• Let the price of copper be $30/tonne, the total value of this market is $4 Billion

Just because the price of copper was more expensive in the second case at $30/tonne vs $10/tonne does not necessairly mean that one economy is more "rich" when the amount of physical resources remain the same. I would be much happier to if I (and others could) a good $100,000 house versus a terrible $500,000 bad (top of the line) one.

I think that there is a gap if the measurement of "wealth" is "money."

The balance of living in a one room apartment

Another 3 days to move into the apartment and packing is underway. The number of belongings are less than expected; I regret not haggling with the moving company for an even cheaper price. I looked up the weather this weekend and there is a 50% chance of rain. I've never had to move in the rain before and it will be interesting to see how the moving company deals with it.

I did some more research last weekend and found out that renting a truck for a day was 8000 yen compared to the moving fee of 40,000 yen that I am paying. The only catch is though my driver’s license in Japan allows me to drive stick shift, I have little experience at it (perhaps 2~3 times). I would be interested in renting a manual car and learning stick because saving 30,000 yen for a single day's work is worth the effort.

I spent the last weekend looking at furniture for the new room as it will be a much bigger compared to what I have now. I can fit a sofa, bed, a desk and my weight training machine and the question is, do I really want to buy so many things? One of the things that I really liked about living light on belongings is that it is easy for move around (though I haven't been taking advantage of that).

Though it has been tempting to buy furniture in advance and have everything arrive on the same day, I have decided that it would be better to live in an empty space first to get a feel for the room before loading it up with stuff; I would rather have bought things to realize that it doesn't fit in well with the room. I'll be pretty happy with moving as it'll be really nice to be able to invite friends over.

On preparing to move

There are hidden costs (and benefits) to everything. I've been living in the company dorms for the past 3 years and by virtue of the age limit I am moving out by the end of the week to my own place. Leaving is a blessing because despite the savings in rent ($200 monthly), I probably have incurred plenty of social costs by living in the dorms. As a result of living in the company dorms, I am far away from Tokyo and can't invite guests over because of the building rules. As a result, I only see friends when invited to an event or when I host something elsewhere.

One part to living is the social aspects of living is knowing people and being able to do things/interact with them. The living conditions up until now have prevented me from doing as much as I would like to have done. Though in retrospect, I did end up doing more traveling around Japan from the savings from really cheap rent.

I have managed to find an apartment just outside of Tokyo, a brand new building and I will be the first tenant into my apartment. It is a fairly spacious 1 room apartment with an insulated floor and I have managed to select a corner room, where to one side is a wall shared with the outside and the other wall is shared with an elevator, meaning that I have free reign to play music and watch movies as loud as I would like and am incredibly happy about this.

I face one other dilemma; in that the room is really spacious and I would like to buy some nice furniture go into where I live. The problem I fear is having too many large belongings that eventually tie me down to a place.

The best solution I can come up with so far is to make more money to make the costs of buying the furniture insignificant to my income, making what I buy "disposable."

 

The post earthquake situation in Tokyo

For the large part, life in Tokyo has largely returned to normal. There are still some noticeable after effects of the earthquake still lingering in the city however. Since the shutdown of the Fukushima reactors, the entire Kanto region (the region surrounding Tokyo) is running at reduced power capacity and the entire region has managed to cut power consumption by at least 25% since the earthquake, alleviating the need for rolling blackouts through the region.

A link to the power charts for the Kanto region is provided here. The blue dotted line represent's last year's power consumption, the small blue bar is the total peak power available and the pinkish line represents yesterday's power consumption and the blue bars represents power consumption for the for the current day.

It's rather fascinating to see how much more power people and companies are able to cut and still maintain fairly "normal" operation. I doubt that you will see this level of power consumption elsewhere in the world however, as the attention to detail and the character to voluntarily reduce consumption is the same with other countries. The above graph could be a representation of the amount of "disposable power" Japan has.

In more detail, office buildings have reduced power to lighting, reduced the number of elevators and escalators operating. The trains have turned off the air conditioning and turned off lights inside the cabins during the days (it gets incredibly dark when going through short tunnels and really shaded regions). I expect power consumption to slowly rise as industrial regions will slowly rise as companies start brining more equipment and facilities online.

We have yet to determine if the power shortages will continue through the summer as one additional power plant is scheduled (since before the earthquake) to be taken offline for inspection through the summer, possibly bringing back the blackouts. There have been talks through the news that this might be not necessary as we have been seeing unprecedented levels of power conservation.

Supermarkets are currently short on food products as the shelves for certain products are either empty or only half full; coupling that with the current dim lightning resulting from power conservation, it presents a rather dreary atmosphere. The supermarkets are short on certain vegetables, milk, soy bean products and bottled water (which were quickly snapped up because of fears of water contamination).

The schedule for the current project that I am working on is being pushed back by about 6 months (and we are really rushing it at this rate). I expect that much production in Japan be significantly reduced and research delayed. Since the currency jump after the earthquake, I have decided to move some of my funds out of yen and into other currencies as I expect the yen to weaken throughout the year. Already in less than a month, the yen has dropped significantly.

I expect the earthquake will send slow shockwaves throughout many technology companies throughout the world as Japan produces many high tech components in many electronic devices. This might be an opportunity for other emerging market players to pick up the slack for reduced production from Japan. Right now, this probably is a very big opportunity for other Asian countries like Korea and China to play technological catch up with Japan. I expect competition to be fierce once Japan gets back on its feet.