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An end to the Japanese lesson or Still ?

Tokugawa Ieyasu

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I would like to ask you "When Euro collapse?"
Greece is not a big economy in the EU countries, but financial collapse of Greece will trigger the collapse of PIIGS economies. Then Germany and France will need to help their fianancial burden by extending financial supports.... Meaning German/French/Dutch/Others citizens will need to undertake financial supports.
http://www.bloomberg.com/apps/news?pid=20601110&sid=avP8AQykrK3U
Europeans may be able to help each other as they are ethically Superior Race than Japanese (🙂Whale-eaters/Bluefin tuna-eaters/WWII atrocious race/inhuma race/racist country/200% GDP debt-laden country/etc.).

I’m not sure about its collapse, but hindsight is 20/20, and the single currency now sure looks like a vanity project for the European elite for further political consolidation rather than for sound economic reasons. Of course, non-competitive southern European countries (and Ireland) took advantage of the low interest rate set by the ECB (for Germany's stagnant economy) to embark on an epic borrowing binge, with the predictable results of a huge debt-fueled housing boom and followed by an epic bust-Spain is a textbook example, it was one of the fastest growing economies in the Euro-zone during the past decade, but now since its real-estate bubble collapsed, now has a real unemployment rate close to 25%.
 

hsakakibara1

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S&P Threatens Japan Downgrade; DPJ Slow To Curb Debt
http://www.nni.nikkei.co.jp/e/fr/tnks/Nni20100126D26JF660.htm
I wonder why S&P is sticking to the rating of JGB .... although nobody ask them to rate JGB.
History clearly indicates that JGB is not affected by rating of Anglo-American rating firms such as S&B, Moody's, etc. Always lowest yield means JGB is the most trustable in the world despite those ratings.
Japanese lessons clearly indicate:
1. Don't take early exit policy as deleverage of private sector will need more time than we expect.
2. Don't cut government budget/expenditure as it is only hope for maintaining GDP or economy.
3. Don't care about Anglo-American rating firms as their ratings do not affect yield of government bonds.


Why isn't the S&P threatening a downgrade of T bills in the US? The US is in a much worse financial situation that Japan is. I believe it is all politics.
 

hsakakibara1

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Yeah. There are probably many "experts of Japan" especially in British newspapers, reporting "Japanese are illegal whalers!" "Japanese national debt is reaching 200% of GDP" "Japanese economy enters again lost decades", via thorough field research in Japan. :D

I for one am sick and tired of reading in the US press how bad off Japan is. Here in AMERICA things are a real mess. The whole place is sliding toward poverty and the economy is all smoke and mirrors. I am afraid that this party will be over in the next couple of years and I only hope that they don't drag Japan and the rest of Asia with them.
 

Astroboy

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Why isn't the S&P threatening a downgrade of T bills in the US? The US is in a much worse financial situation that Japan is. I believe it is all politics.

Anglo-American rating firms are powerless against Japan. Their ratings haven't affected Japanese government bonds AT ALL. 🙂

I for one am sick and tired of reading in the US press how bad off Japan is. Here in AMERICA things are a real mess. The whole place is sliding toward poverty and the economy is all smoke and mirrors. I am afraid that this party will be over in the next couple of years and I only hope that they don't drag Japan and the rest of Asia with them.

This is the reason why Japan continued to reduce economic dependence on US/EU market. Japan has increasingly been benefiting from BRICS economies. 🙂
 
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Astroboy

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Germany said on Monday it could offer aid for Greece within days if it agreed to painful new austerity measures, but rescue jitters pushed the cost of insuring against a Greek debt default to a record high.
http://uk.reuters.com/article/idUKTRE63O0R720100426
End of Greek economy is likely to approach .... as Greek government debt is about 100% GDP ... while Japanese government debt is 200% GDP !!!!
GReek is an interesting example to understand Japan. In short, Japan is an another planet, which is not affected by anglo-american capitalism. :)
 

nottomention

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From yet another view point, what keeps the depression in Japan for such long time is because of the monetary and fiscal policy taken to 'fight against deflation'. In fact, it taxes all Yen owner to pay for the debtors.
Generalized speaking, the 'Yen owner' includes all owners of fixed income contracts , like bank savers, bond holders, and salary employees. On the other side, the so called debtor are just their counter party.
If no intervention, this is a fair game between both sides. Any excess return opportunity which tips the balance will result in interest rate(aka price or wage, depends on type of the contract) changing, thus maintaining the balance dynamically.
However, the Japanese government has decided to support the debtors, no matter their REAL(not money amount bloated through inflation) investment return is self-sufficient or not. Perhaps they are just sustainable by subvention policies. The result is, while the debtors like some international companies, occupying most of economic resources of Japan,
the era for them or their model has been past. Their finance report could be worse if no government's support, like weak Yen.
A joke goes that if **** (a Japan international electronics company) were bankrupt, perhaps the most impacted would not be Japan, but China. Because the OEMs would lose their orders, and then many Chinese workers of manufacturers would lose their job.
briefly, As long as the Japan government goes on inflating Yen to fight against deflation,
Japanese investors goes on risking their capital to sustain other countries' bubble(not to mention, including their own), the depression will be sustained well. After all, in other words, 'interest rate' reflects TRUE economic growth to some extent.
OFFTOPIC
Like all other countries, it seems that Keynesian or some kind of "inflation is healthy, deflation is evil" view is dominant in government and medias. Very few people ever heard Mises or Austrian economics,etc.
 
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Astroboy

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Like all other countries, it seems that Keynesian or some kind of "inflation is healthy, deflation is evil" view is dominant in government and medias. Very few people ever heard Mises or Austrian economics,etc.

I don't understand your post well. Do you mean "Deflation is not evil" ?
 

nottomention

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I don't understand your post well. Do you mean "Deflation is not evil" ?
Almost yes.
But my main point is not that deflation is good or bad, Instead, is that the action against deflation would result in some bad consequences.
You may refer to http : / / mises . org/Books/humanaction.pdf Chapter 20, for example.
And
h t t p : //www . mises . org/books/inflation.pdf
 

Astroboy

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Spain to cut goverment spending ...
The cuts announced on Wednesday are deep. Some are also deeply controversial - including a 5% cut in public sector pay, starting in June. Salaries will then be frozen for 2011. There are big cuts in public investment too, and in development aid. Some pensions will be frozen. Smaller savings include an end to the 2,500-euro (£2,150; $3,200) cash payout for new mothers, known as "baby cheques". ...

I think .... this policy will cause serious social unrest in Spain, meaning more unemployment and more failure of private sector. Spain does not learn the Japanese lesson - Don't care public debt !
 
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Tokugawa Ieyasu

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Spain to cut goverment spending ...
I think .... this policy will cause serious social unrest in Spain, meaning more unemployment and more failure of private sector. Spain does not learn the Japanese lesson - Don't care public debt !
Spain is tied to the Euro and therefore and therefore does not control its own monetary destiny; it runs a huge trade and current account deficit and hence has to import massive amounts of capital from abroad. Without competitive industry, its preceding economic boom was based solely on a gigantic real estate bubble fueled by cheap credit from abroad and immigrant labor from South America. Leaving the Euro could lead to devaluation, but that would also cause massive bank runs and systematic collapse for highly-leveraged Spanish financial institutions. They and the other ツ“PIIGSツ” countries are in an economics no-man’s-land right now: with years of painful austerity and economic malaise, without the escape route provided by currency devaluation and increase of competitiveness through exports.
 

Astroboy

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currency devaluation and increase of competitiveness through exports

- Soviet-style Socialism collapsed in 1980s
- Japanese Kaizen Capitalism failed in mid 1990s
- Anglo-American Money Capitalism failed 2 years ago
- Continetal European Common Currency-based Capitalism is failing now

So .... Chinese Red Capitalism is winning ? What do you think ?
 

Tokugawa Ieyasu

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- Soviet-style Socialism collapsed in 1980s
- Japanese Kaizen Capitalism failed in mid 1990s
- Anglo-American Money Capitalism failed 2 years ago
- Continetal European Common Currency-based Capitalism is failing now
So .... Chinese Red Capitalism is winning ? What do you think ?

There's an old saying in Chinese, "ツ青キ窶ケテ俄?「Kツ税?,窶ケツ祥??窶板カナ?ツウ".

So no, I don't think China is "winning", although it played the globalization game pretty well to this point and escaped the great financial crisis with minimal damage.
 

Astroboy

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George Soros warned European recession next year "almost inevitable".

Germany had imposed its criteria on how a 750 billion euro (674 billion pounds) euro zone rescue mechanism should be used and was imposing its own standards -- a trade surplus and a high savings rate -- on the rest of Europe, Soros said.
"But you can't be a creditor country, a surplus country, without somebody being in deficit," he said.
"That's the real danger of the present situation -- that by imposing fiscal discipline at a time of insufficient demand and a weak banking system, by wanting to have a balanced budget you are actually ... setting in motion a downward spiral," he said.
http://uk.reuters.com/article/idUKTRE65E5JT20100615

As I warned in the previous posts, fiscal discipline after bubble burst will surely cause more serious recession. Japan avoided economic depression by increasing government's spendings, and resulted in a huge government debts. European leaders do not understand the Japanese lesson, but they are taking opposite policy.

I think EU economy will fall into depression and .... and as Soros warned, WARNS OF SOCIAL UNREST
"If there is no exit, (it) is liable to give rise to social unrest and, if you follow the line, social unrest can give rise to demand for law and order and (sow the) seeds of what happened in the inter-war period," he said.

I really don't understand why rest of the world do not learn from the Japanese lesson.
 

Astroboy

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Annual inflation rate in OECD eases slightly to 2.0% in May 2010
OCED said:
Consumer prices in the OECD area1 rose by 2.0 % in the year to May 2010, slightly down from 2.1% in April. This small decrease in inflation rates mainly reflected the slowing down of energy prices, which increased by 11% in May, compared with 12.1% in April. Excluding food and energy, consumer prices rose by 1.3 % in May, unchanged from April.
Food prices rose by 0.5% in the year to May 2010, the third consecutive monthly increase following a long period of negative rates between September 2009 and February 2010.
http://www.oecd.org/dataoecd/18/58/45548839.pdf

Despite ups and downs month-by-month, CPI in developed countries has continued to be low or declinig.
It is bad news for financial companies of the world ... because they cannot solve bad laon issues lent to private sector or household. People will stop purchasing, resulting in recession.

Only Government expenditure is an answer to solve, but all of developed countries will not learn Japanese lesson, and thus we are falling down to deep recession again.
 

Astroboy

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There's an old saying in Chinese, "ツ青キ窶ケテ俄?「Kツ税?,窶ケツ祥??窶板カナ?ツウ".
So no, I don't think China is "winning", although it played the globalization game pretty well to this point and escaped the great financial crisis with minimal damage.

I found an interesting article at http://www.nytimes.com/2010/07/20/business/global/20hedge.html

His latest obsession is China. He likens the country to Starbucks: good at growing quickly but not so good at creating wealth. ツ“The idea is that things would happen today that are commonly thought of as impossible, most notably a significant reversal of China,ツ” Mr. Hendry said.

Maps cover the walls of his office. On one, blue magnetic pins plot his recent trip through China. He filmed himself there in front of huge, empty office buildings and giant new bridges in the middle of nowhere — signs, he said, of a credit bubble.


Already credit bubble is boosted across China ?? following Japan's path ?? But I think it's too early because China theoretically has more room for expansion to satisfy real demand. What do you think ?
 

Astroboy

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Committee of European Banking Supervisors (CEBS) has said:
ONLY Seven of the 91 European EU banks fail stress tests.

http://www.bbc.co.uk/news/business-10732597

ONLY Seven ..... If CEBS says so, maybe so, but I am remebering assessments of major Japanese banks' assets in late 1990s. Probably European banks are following Japanese banks, I assume.
 

Astroboy

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EU Banks May Disclose Sovereign-Debt Holdings With Stress Tests, but Defaults Not Included
http://www.bloomberg.com/news/2010-...-sovereign-debt-with-stress-test-results.html

According to CEBS, market value of sovereign bonds that EU Banks purchased is not reflected in the Stress Test because these bonds will be held until redemtion date and defaults of sovereign bonds will never happen.
In short, EU Banks change the rule - current value accounting or market-value accounting - to their preference.

Therefore, CEBS's Stress Test report is NOT trustable.
 

Astroboy

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U.S. Bank Failures In 2010 Surpass 100 --- much faster than 2009.
http://www.huffingtonpost.com/2010/07/24/us-bank-failures-2010-over-100_n_658149.html

German 30-Year Yield Near Three-Week High After Offering Not Fully Covered
http://www.bloomberg.com/news/2010-...before-debt-auctions-as-equities-advance.html

More US Banks are falling down as economy is entering into depression.
German bonds are not sold well. This means investors see risk of German economy.

As I said, US/EU governments MUST extend stimulus package, not cutting deficits.... from Japanese experience.

Meanwhile, Japanese market from Monday will be ..... Soaring YEN and Declining NIKKEI ?
 

Astroboy

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The US economy risks "Japanese-style" stagnation, a top Federal Reserve official warned Thursday, as a key economic report was expected to show the recovery is losing pace.
James Bullard -- a member of the Fed's interest rate-setting panel -- said the United States was closer to a Japanese-style lost decade "than at any time in recent history."
"Escape from such an outcome is problematic," he wrote in a Fed journal. "Hope is not a strategy."
http://news.yahoo.com/s/afp/20100729/pl_afp/useconomygrowthbank

A US official has been realizing a sign of deflationary economy and a path to Japanese-style lost decade.
But I would like to tell James Bullard that it is not a question of right or wrong fiscal policy, but a result of globalizaion of economy.

Meanwhile, deflationary economy is not so bad as "cash" is more valuable than "goods", and also good for environment.
 

Pachipro

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The truth of the matter is that the US WILL have a Japanese style deflationary economy that will last for more than a decade and perhaps two, but it will be far, far worse due to the $13,000,000,000,000 (13 trillion!) national debt the US has. If one takes into account all the credit card debt, mortgage debt and other outstanding debt that the people have, coupled with state governmental debt, social security, pensions, the total rises to more than $70 trillion and, being a broke country begging on our hands and knees for loans from the Chinese and Japanese, the US will NEVER, EVER, be able to pay back that debt. NEVER! Especially since the average American has less than $50,000 in assets with the average being under $25,000, America will declare insolvency first or severely devalue their currency and economy which they are presently doing little by little so the average American doesn't not notice it.

If anyone thinks that, well Japan survived and so will America, they are sadly mistaken as Japan is a nation of savers and that is what has kept them above water these past 20 years and will continue to do so. The government did not have to put on knee pads begging for loans from other nations. America did, does, and will continue to do so until they are bankrupt and their money worthless. One look at the exchange rate today will tell you that.

75% of the American economy depends on consumers spending money and today they simply cannot do it. They are dead broke, losing their jobs and homes at a record pace and going deeper into debt as more and more manufacturing is moved to China practically on a daily basis and they will not return for many years if ever. And if they do, Americans will be making products for China at wages lower than what they are receiving today. Very sad for a once powerful economy that once fed the world and supplied the best products.
 

Astroboy

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Japanese-style inflation (aka Deflation) fears bode well for US
http://www.ft.com/cms/s/0/aa062924-a17f-11df-9656-00144feabdc0.html

As I predict, the article admits US economy is enetring into Japan-style economy as USA does not learn from Japanese lesson.

The banks are not lending. They say there is little demand. They are also being told they need to have more capital and less leverage. Regulators realise that this may not be the best time to insist on banks deleveraging and have delayed the introduction of strict rules.

Banks have decided it is safer to put their money into government bonds than into loans.

Not long ago, American critics of Japan used to mock the existence of zombie companies and banks. But how different are Fannie and Freddie from the zombies of Tokyo? asks Peter Fisher, in charge of $1,000bn for BlackRock.

But the artcle says that there is still a little hope for US economy not to become Japan as follows:

- Japan is plagued by structural issues that do not exist in the US.
- The demographics of Japan are worrying. An ageing population means the chances of increased productivity are lower.
- US technology and innovation continue to be the envy of the world. It is better to be the country that produced Google and Apple than Sony and Fujitsu.
- The US stock market is delivering a far different message than the bond market – the rally in recent weeks speaks of optimism and hope. Corporate earnings are good, especially from IT companies such as Intel and those selling to the emerging world.

I think ... Japanese lesson indicates that The problem started because of a big misunderstanding .. like the above FT article.
 

hsakakibara1

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Another Stupid Article

Japanese-style inflation (aka Deflation) fears bode well for US
http://www.ft.com/cms/s/0/aa062924-a17f-11df-9656-00144feabdc0.html
As I predict, the article admits US economy is enetring into Japan-style economy as USA does not learn from Japanese lesson.
But the artcle says that there is still a little hope for US economy not to become Japan as follows:
- Japan is plagued by structural issues that do not exist in the US.
- The demographics of Japan are worrying. An ageing population means the chances of increased productivity are lower.
- US technology and innovation continue to be the envy of the world. It is better to be the country that produced Google and Apple than Sony and Fujitsu.
- The US stock market is delivering a far different message than the bond market – the rally in recent weeks speaks of optimism and hope. Corporate earnings are good, especially from IT companies such as Intel and those selling to the emerging world.
I think ... Japanese lesson indicates that The problem started because of a big misunderstanding .. like the above FT article.

Another stupid article by stupid people for stupid people.

1. What structural problems? In fact, the whole US infrastructure is crumbling.
2. Yes, Japan is graying but so are most countries in Europe, East Asia and even the US.
3. US technology and innovation? Yes for a few things but for the most part there is increasingly more innovation in Asia. Most Apple products, are they even completely designed and made in America? Hell no! Google? A software firm. The brick and mortart industries are where the real strength lies.
4. COrporate earnings in the US are mostly all a juggling act. Many have taken stimulous money and kept it for their bottom line instead of hiring new workers.

IF America was so great, then why are most choosing to invest OUT OF AMERICA??? PH, and before I forget, many wealthy Americans are headed for the door, so the government is planning to put an exit tax on them I think next year. So cool!
 

Astroboy

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Cautionary tale about exit strategies from 1930s Japan
Memories of the 1930s still haunt Japanese policymakers, particularly, but not exclusively, at the Bank of Japan. Little wonder that so many Japanese leaders prize social cohesion and policy stability so highly, even though this timidity has produced a decade of stagnation.

Many German leaders have similar instincts, partly because of memories of 1920s hyperinflation. As a columnist pointed out here on Thursday, this is a reason that Germany could end up emulating Japan. It also explains the current tone of the European Central Bank.

But in the US today, it is the lessons from the Great Depression that dominate the debate, with people such as Mr Bernanke determined to avoid repeating the mistakes of inaction. That is understandable; I, for one, recognise that stimulus has been necessary. But US policymakers and investors might do well to heed the Takahashi tale too. It could offer historical balance and a reminder of how hard exit strategies can be, even in the absence of political extremism
http://www.ft.com/cms/s/0/686b6978-b6ad-11df-b3dd-00144feabdc0.html

This FT article is quite interesting as it points out policymakers are usually affected by historc trauma their nations experienced.

Japan: tend to avoid social unrest and put emphasis on fiscal spending rather than austerity.
Germany: tend to emphasize austerity to avoid hyper-inflation rather than fiscal spending.
USA: no trauma yet ?
 

hsakakibara1

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Cautionary tale about exit strategies from 1930s Japan
http://www.ft.com/cms/s/0/686b6978-b6ad-11df-b3dd-00144feabdc0.html
This FT article is quite interesting as it points out policymakers are usually affected by historc trauma their nations experienced.
Japan: tend to avoid social unrest and put emphasis on fiscal spending rather than austerity.
Germany: tend to emphasize austerity to avoid hyper-inflation rather than fiscal spending.
USA: no trauma yet ?

In America the government is busy printing money like as if it were going out of style. I really doubt this can continue much longer.

Please read:

http://www.escapefromamerica.com/2010/09/insulate-yourself-from-the-coming-economic-collapse/
 

Dogen Z

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There was a lengthy article about the Japanese lesson in the Wall Street Journal, too. The gist of it was to do want Japan didn't or couldn't: Act decisively and boldly in the early stage of the problem. Ergo, the prospect of the Fed's QE2 is on everyone's radar.
 
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