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Is US entering Japan's nightmare?

Astroboy

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This artcile is too pessimistic.

Leverage is like youth. It can be very enjoyable while
it lasts, but it can’t go on forever. Logic is against it.
So is compound interest. As debt escalates, an evergreater
percentage of future income must be devoted
to debt service.

Yes, on private debts, but No about sovereign bonds in case of Japan and USA as both are sovereign nations and government bonds are all in their own currencies. Roll-over and modest inflation will solve the debts in a longer term.

But I don't know how Japan can get out of deflationary economy ... maybe never.
 

Astroboy

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Debts Rise, and Go Unpaid, as Bust Erodes Home Equity
Debts Rise, and Go Unpaid, as Bust Erodes Home Equity (Published 2010)

After bubble burst in Japan, many people had been troubled with imbalance of their B/S (declining assets but debt size remained unchanged), and some went suicide as they need to clean up their morgage by the money of life insurance. Because Rule No1 of the capitalism is "We must pay back borrowed money to lender."
So I am shocked to see Walkway in the USA or refuse to pay. I didn't know that is possible !
But such a strategic default may be good to avoid Japanese-style lost decade.

transparentBGgif-1.jpg
 

hsakakibara1

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US now starting deflation

The other day I was in Macy's department store on 34th street in NYC. I was shocked. So many of the men's clothes, not only on the firest floor where they sell junk, but also on the 2nd and 3rd floors, were reduced in price drastically.

This is the case everywhere now. Prices are going down and I believe the US has started down the deflationary path. More people are not spending, or are spending less. I wonder how the nation will cope.
 

noyhauser

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I don't really want to get into a huge debate on this, but really just reading from the doom and gloom sources will just give you a very one sided, pessimistic view. Is the US in a tight place? yes. Does it mean that it will inevitably collapse or falter; not at all. In the short term the financial stimulus basically saved the country a great depression type collapse. According to a recent study done by Alan Blinder, and Mark Zandi, the federal stimulus stabilized a country near collapse. Without a policy response, the US GDP would have declined 12% compared to the actual decline of 4%, While unemployment would have risen to 16.5%, when it only reached 10%. The collapse of tax revenues would have created a fiscal hole of $2.6 trillion in 2011 alone, perpetuating over several years. Instead, the US incurred a one time loss of 1.0 trillion for TARP+ARRA, which was spread over several years.

In the mid term there are several issues that may cause problems, high debt load, stagnating wages and structural unemployment. I think however the administration is slowly trying to change some of the fundamentals of US society to make them more sustainable. Healthcare reform is vital and will make all US industries more competitive, while curbing or rescinding the cost curve Moreover Education and industry reforms will offer new avenues for growth. Debt might be a problem to this, but I think compared to other countries its not nearly the issue that some think it is.

Finally in the long term, the US has some very encouraging indicators. The country's population growth is among the healthiest and sustainable in the world. China has the One child policy which stunts its growth and India suffers from the opposite problem. Excluding immigration the US population growth is well above the replacement rate. New generations also receive comparatively good education, compared to that in the world.

Does this mean the US will be all peaches and cream now or in the immediate future? Absolutely not. Its going to keep scraping along the bottom as it goes through a major transition period for some time. Yet its unlikely to "collapse" and when placed in perspective there are some encouraging signs.

You can ignore everything I said all you want and cite every negative analysis on each of these points... its up to you. Its just a perspective.
 

Pachipro

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noyhauser said:
I don't really want to get into a huge debate on this, but really just reading from the doom and gloom sources will just give you a very one sided, pessimistic view.
Unfortunately, the "doom and gloom sources" are NOT giving us a pessimistic view, they are telling the truth while the main stream media is trying to feed us a false hope and belief that things are, and will, get better when nothing could be further from the truth.

The government may tell us that U3 unemployment is 9.5%, but when you factor in U6, the number jumps to over 16%, and then if you subtract the fraudulent birth-death ratio the number jump to over 20%! Check out this link for U numbers which the government manipulates to keep you from knowing the truth. It's all a matter of juggling the numbers.

A web site from your own country lists the 40 reasons why there is no recovery in sight for the US. The top ten are:
1 - According to one shocking new survey, 28% of U.S. households have at least one member that is looking for a full-time job.

2 - A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.

3 - There are 9.2 million Americans that are unemployed who are not receiving an unemployment insurance check.

4 - In America today, the average time needed to find a job has risen to a record 35.2 weeks.

5 - According to one analysis, the United States has lost 10.5 million jobs since 2007.

6 - China's trade surplus (much of it with the United States) climbed 140 percent in June compared to a year earlier.

7 - This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour. (In America it is well over $15/hr. My input)


8 - According to a poll taken in 2009, 61 percent of Americans "always or usually" live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.

9 - According to a recent poll conducted by Bloomberg, 71% of Americans say that it still feels like the economy is in a recession.

10 - Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.
You can read the link for the remaining 30.

If the truth be told, much of the bailout money went to Wall Street and major banks to cover their losses from Mortgage Backed Securities they sold overseas and to reimburse those overseas firms that lost money from buying these fraudulent securities. That's why the Fed refuses to disclose where this money went, but the info is on the internet if you look because the media will not tell you this.

Also, the bailout money was created out of thin air and it is the US taxpayer that will have to pay for it.

Face it, we are still in a major depression and it will only get worse from here on out and will make the past 20 years of Japan's "Lost two decades" look like a walk in the park. The media and the government are covering up the truth of the depression and we are NOT in a recovery, nor will we see one. What we will see is more BS and a manipulating of the numbers and Wall Street.

32 states are broke and will need a bailout. Americans do not want to borrow any more money as they are broke and their homes are worth less than what they paid for them. When nearly 3/4's of the US GDP depends on consumer spending, this only spells trouble when Americans stop borrowing and starts saving.

If unemployment is to decrease, pray tell, where are these Americans going to work when all of their jobs have been off-shored? They are NOT coming back for many years!

The Obama administration cannot change this, nor will they, because they take their marching orders from the Fed and Wall Street. Why is the administration and the Fed and the Treasury filled with Wall Street personnel? Think about it and research it!

The Dow will reach 7,000 before it ever hopes to see 11,000 or 12,000. Look at Japan. Since the Nikkei's peak in 1990 at about 39,000, it never, ever, even came close to the highs of then. The same will hold true for the US. As went Japan since it's real-estate bust, so will the US. Look for at least 10 - 20 years before it ever even comes close to what it was in the past.

You can shoot the messenger if you want, but only time and the facts will tell. It's time to take off the rose colored glasses and look at the facts and the facts say things will get worse before they get better.
 

hsakakibara1

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Probably one of the statements you made I can agree with in your post.
But he is right. Perhaps you, noyhauser, are in a state of denial. The statements above are all FACTS, and merely calling them "negativity" is similar to the Jews in Nazi Germany teling themselves that all would be "OK". (Then again I don't blame you. The media in America is set up to show that the American lifestyle is better than none other, and that things are all set to improve.)
Please read another "dismal" article on America:
http://www.escapefromamerica.com/2010/09/insulate-yourself-from-the-coming-economic-collapse/
How many facts are you going to deny? It is really bad here and oinly getting worse. This place is going to the dogs and that is a shame because there are a lot of really good people here that are going to suffer for no reason.
Again, Japan is no island of paradise, to be sure, but we will survive this better than America, although things in Japan will also be rough. Then again, the Japanese government tends to over exagerate things on the negative side with the false hope of getting more world cooperation and sympathy.
 

noyhauser

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But he is right. Perhaps you, noyhauser, are in a state of denial. The statements above are all FACTS, and merely calling them "negativity" is similar to the Jews in Nazi Germany teling themselves that all would be "OK". (Then again I don't blame you. The media in America is set up to show that the American lifestyle is better than none other, and that things are all set to improve.)

Maybe you should stick to arguing the facts rather than making assumptions about what I know or where I've been.

Please read another "dismal" article on America:
http://www.escapefromamerica.com/2010/09/insulate-yourself-from-the-coming-economic-collapse/
How many facts are you going to deny? It is really bad here and oinly getting worse. This place is going to the dogs and that is a shame because there are a lot of really good people here that are going to suffer for no reason.

See these are "your facts" are only culled from highly skewed sources. I could simply read only positive sources and come here and proclaim everything will be alright. Yet that would be equally as silly as just reading from negative sources. What makes your sources so much more right than those you seek to denigrate? Its because you think that set of analysis is correct. Yet there are other views which consider different statistics and offer a different outlook. Which is right?

I get it, there are some worrying issues with mid-and-term growth and the health of the US economy. I agree there is a significant issue with structural unemployment , which requires new policy instruments to deal with. Personal and government debt is higher than before. However, if we look at likely the most skeptical economic analyst like Nouriel Roubini, they don't see a depression as being a possibility. They suggest that a double dip recession is possible as well as a decade of austerity similar to what Canada and New Zealand faced in the 1990s. It may take the full decade to bring the unemployment rate down to 2005 levels. However that doesn't mean a depression is in the offing. The safe bet is that it will be a slow and tough economic transition, but there are positive indicators for long term growth.

Personally I'd never make a concrete prediction because I know they are really difficult to make accurately. I'm willing to accept that a depression is possible, though its very unlikely. Where you and I differ is that you treat it as a near certainty. There are general trends that indicate gradual growth with bumps along the way, but then again I could be wrong (and I have been too many times.) Nevertheless, I think its more useful and effective to look at the whole range of opinions and judge accordingly.

Really I feel this conversation has transpired exactly as I feared it would. Again, I'm not saying that what you've suggested is impossible, its just there is also countervailing indicators and having a little bit more balance would make your analysis more convincing. That was my suggestion from the start. I think it just might be best if I recuse myself with the rejoinder, "we'll see in five years."
 

hsakakibara1

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Noyhauser, we'll see next year. I have a strong feelings things in America will unravel around March time. See ya!
 

nyouyaku

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The situation is exactly the same as I was in Japan when it occurred and I left because of the high housing prices. The only difference is that Japan was able to survive because it is a creditor nation and the Japanese people are savers. America, on the other hand is a debtor nation who has exported their inflation these many years by "forcing" other countries to buy up their T-Bills, and the nation, as a whole has a negative saving rate and is severely in debt to the tyune of $9 trillion dollars! ($9,000,000,000,000) That amount can never be repaid.
The "designed" housing bubble has collapsed and the next shoe to drop will be the credit card and debt bubble which I do not believe the nation can survive.
If one looks back, the Japanese stock market was hovering around 44,000 and homes were out of reach of the average Japanese. Today, almost 20 years later, housing prices still have not even come close to their 1989 peak and the market has also never fully recovered and is still less than half of what it was 20 years ago. I fear the same will hold true for the US only it will be much, much worse as 85% of our manufacturing has been off-shored and the US depends on foreign nations for their very survival. Watch the dollar as it will continue to nose dive and the stock market will fall below 10,000 and even lower.
True, but there will be no "financial manuvering" as it is a designed crash and fall from grace. The economy will not be put on track for many years to come.

With the US Treasuries reaching all time lows, and the Dow Jones Industrial Average falling the way it did all August and continuing to do so in September, perhaps studying the lost decade of the deflationary economy of Japan with low interest rates is a practical model to study since the US and other OECD countries will be following in the same deflationary footsteps. Perhaps Robert Prechter's Elliott Wave Theory might be proven correct, where the Dow and the price of one ounce of gold will reach 1:1 before a rebound will come.
 

Astroboy

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Since I started this thread, nearly three years passed, and so far my prediction was proved right. USA and Europe are both realizing that they are turning Japanese.
20110730_LDD001_1-1.jpg


Somebody say ... "No, we are not turning Japanese as we don't enter deflationary economy yet", but then I would say that it's worse than Japan as risk of stagflation (inflation + recession) may rise.
 

Alegalvez

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Well, I know this is an old post, but oh well lol. I'm a US citizen and I believe you. The government here are the most hard headed beings. They believe what they say, do, or think is always right. Damn bastards!
 
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