Is US entering Japan's nightmare?

[JerseyBoy]

At the end of the day, what counts is whether you (as an individual) have the asset and savings or not, because counting on the trickle-down from the national wealth (or the government) is like rolling a dice and hoping for the best. Once you have enough assets and savings (or, internationally marketable talents), you can pick and choose the place you want to live, work, or retire, without being restricted to the birth country.

 

[Astroboy]

And US position is:

Contorary Japan position is:
Japan's net asset position amounted to 250.2 trillion yen at year-end 2007 -- a new record high for
the second consecutive year -- as a result of an increase of 35.1 trillion yen or 16.3 percent from
the previous year-end (215.1 trillion yen).
http://www.boj.or.jp/en/type/ronbun/ron/research07/data/ron0808a.pdf

As the graph indicates, About 20% of US GDP is NATIONAL DEBT of USA (in other words, Foreigner's Asset). But as USA is a sovereign nation, being able to print USD note, US financial collapse is not realistic at this moment. In other words, when US govenment needs to repay it, they can print money and repay to creditors and borrow money again from auction, .... meaning ROLL-OVER continue.

It is possible for USA BECAUSE USD is the defacto international currency and UST-bond is the most Liquidable. But this means that foreigners owning USD assets need to undertake risks of Declining USD value.

This is WHY USA needs to maintain USD value as well as USD-based global capitalism. If the rest of world do not trust USD, then the times of USA will end.

Japan's new PM is interested in developing something Asian currency (like Euro). I suggest US government to stop such a movement in J-government. Otherwise, US economic strength must be deteriorated.

 

[Astroboy]

Failed Bank List
http://www.fdic.gov/bank/individual/failed/banklist.html
I stopped counting the list, but it's obvious that the total number of failed bank surpassed 100 since Sep 2009 ..... and Three more U.S. banks closed, nearly 100 for year Three more U.S. banks closed, nearly 100 for year

But FRB/US government has already begun to talk about exit policy, ending government's stimulus package, and I don't hear any serious news from USA. (e.g. CNN).

Considering Japanese economy size is about 1/3 of USA .... if some 30 regional banks failed in Japan for a period of one year, I am very much sure that ALL Japanese TV/News Media will have great fuss about Collapse of J-economy, telling how terrible it is across Japan, Japan will end tomorrow ... crazy about government bashing and push government to do more about government-led economic stimulus plans, etc. etc. EVERYDAY.

To me.... it is likely that US news are very calm and TV broadcasters are being quite bullish, tough and looking confident....

Japanese media are too much pessimistic ? while US media are optimistic. Or anything else?

 

[Astroboy]

US bank failures top 100 for year
The number of US bank failures this year has topped more than 100 after US federal regulators shut down a trio of small Florida banks. BBC NEWS | Business | US bank failures top 100 for year

As I said in the above post, BBC reported.

100 bank failures may be a sign of next Tsunami of economic turmoil.

 

[Astroboy]

CIT, Filing Statistics, Crusader, Charter, Crabtree: Bankruptcy
Bloomberg - Are you a robot?

As far as I know, CIT is a major commercial bank, lending money to property business as well as many small-to-mid sized companies in USA. So, failture of CIT must be a big problem in US economy.

The point is .... While many US banks like CIT are failing, some financial companies in "Wall Street" have posted very high profits as they use (carry) Cheap USD to emerging markets. USD carry trade is likely to make US-government efforts (QE, record low base rate of FRB, etc.) wasted as low-interest rate money does not go to small-to-mid sized companies.

Needless to say, the US situation today is more than Japan's experience as the world economy is more globalized especially in financial business.

 

[Astroboy]

US jobless rate rises to over 10%
BBC NEWS | Business | US jobless rate rises to over 10%

An increase of unemployment rate means a declining consumer spending in near future. As consumer expenditure account for the largest share - over 70% - of US national economy (GDP). I suggest US government should continue more economic stimulus programme, meaning more government expenditure, and create more job. Otherwise, US economy will shrink more, meaning more sluggish.

It is too early to seek exit policy from JPANAESE experience.

 

[Astroboy]

China says Fed policy threatens global recovery
The US Federal Reserve is fuelling "speculative investments" and endangering global recovery through loose monetary policy, a senior Chinese official warned on Sunday just hours before President Barack Obama arrived in China for his first visit.
Subscribe to read | Financial Times

What China points out is correct..... US FRB policy - continuously supplying cheap USD - is just making another "Bubble" in other countries.... But maybe US Fed aims to do so.

 

[Dogen Z]

China says Fed policy threatens global recovery
The US Federal Reserve is fuelling "speculative investments" and endangering global recovery through loose monetary policy, a senior Chinese official warned on Sunday just hours before President Barack Obama arrived in China for his first visit.
Subscribe to read | Financial Times
What China points out is correct..... US FRB policy - continuously supplying cheap USD - is just making another "Bubble" in other countries.... But maybe US Fed aims to do so.

I think China's main concern is that a cheap dollar makes raw materials more expensive for China since the yuan is more or less pegged to the dollar, causing inflationary pressure to build. So unless China's economy weakens, China will have to eventually loosen that peg, which is what the U.S. wants.

BTW, I wouldn't criticize the Fed if I were you. Japan's cheap yen policy probably contributed to causing the housing bubble.

 

[Astroboy]

I think China's main concern is that a cheap dollar makes raw materials more expensive for China since the yuan is more or less pegged to the dollar, causing inflationary pressure to build. So unless China's economy weakens, China will have to eventually loosen that peg, which is what the U.S. wants.
BTW, I wouldn't criticize the Fed if I were you. Japan's cheap yen policy probably contributed to causing the housing bubble.

Japan's currency policy was/is a result of weak demand on borrowing. In short, less demand on cash in the market makes interest rate lower in order to stimulate cash demand in Japan. Contorary, US policy is not like that. Though more money supply is demanded by small-to-mid sized companies, money does not go there, but letting financial companies in Wallstreet utilize cheap US dollar to increase their profits in other countries. That's what I wanted to tell.

 

[ItalianDude]

When Japan warned USA, they didn't hear us, saying US economy is strong and US-led Global Capitalism is Global Standard. But in fact, is was Global Casino Economy.
Japan needs to develop BRICS markets as an alternative of US market.

Totally true.
American Federal Reserve is composed by financial partners who owns banks (Rothschild, JP Morgan and Goldman Sachs for example) and finance politicians and control media.

 

[Astroboy]

Eurosclerosis Is U.S. Diagnosis Not Japan Stagnation
"We had been worried about turning into Japan," says David Wyss, chief economist at Standard & Poor's Corp. in New York. "But it may be more likely that we end up with sclerosis."
Bloomberg - Are you a robot?

I don't trust Japanese economists, but I do trust US economists.

 

[Astroboy]

US agrees $6m pay cheques for Fannie and Freddie bosses
The heads of US mortgage giants Fannie Mae and Freddie Mac may each receive pay packages of up to $6m (£3.7m) for 2009, depending on company performance.
BBC News - US agrees $6m pay cheques for Fannie and Freddie bosses

I think .... this will NEVER happen in Japan. Though I don't have any specific data, annual income of CEOs of Japanese big companies, including financials (e.g. Mitsubishi Tokyo UFJ, Mizuho, etc.) must not surpass $0.5 million.

 

[Astroboy]

Obama pushing new U.S. export initiative

President Barack Obama is pushing a new initiative to boost U.S. exports by enforcing trade deals and promoting American-made products overseas.
An administration official says Obama will issue an executive order Thursday creating an Export Promotion Cabinet of federal agencies whose work affects exports. The president is instructing the government to use every resource to support his National Export Initiative.

AP source: Obama pushing new U.S. export initiative - USATODAY.com

When USA enjoyed bubble economy, they preferred appreciation of US dollar as they can collect more USD from overseas. However, when the time changed, USA takes a different aproach... meaning USD depreciation. This is very reasonable, I think.

But the "National Export Initiative" will mean "I will bash you! unless you purchase our products". It worked against Japan, but I wonder if it will work against China or not.

 

[hsakakibara1]

With the election of President Obama things will get a little better due to his reforms and his pumping in of literally TRILLIONS of US dollars into the economy. But don't be fooled. The jig is up for the US. The economy is all smoke and mirrors. It will be kept afloat by Asian money and Asian corporations and governments will call the shots in the not-too-distant future.
Japan has problems, but these pale in comparison to America (and to Europe). Asia will lead the way. Invest wisely.

 

[hsakakibara1]

Capitalism

US agrees $6m pay cheques for Fannie and Freddie bosses
The heads of US mortgage giants Fannie Mae and Freddie Mac may each receive pay packages of up to $6m (£3.7m) for 2009, depending on company performance.
BBC News - US agrees $6m pay cheques for Fannie and Freddie bosses
I think .... this will NEVER happen in Japan. Though I don't have any specific data, annual income of CEOs of Japanese big companies, including financials (e.g. Mitsubishi Tokyo UFJ, Mizuho, etc.) must not surpass $0.5 million.

I agree. In the US it is capitalism to the extreme. To hell with the common worker. Here the top 5% probably consume about 60% of the goods and services.

 

[hsakakibara1]

Another great article on the US decline

http://strategicinvestment.com/issues/si_june_2010_issue.pdf

 

[Elizabeth]

Personally, I hope we crush the banks if we go down again. There's really only one way to cleanse the system and that is to force the losers to lose. Unfortunately, we could have done this two years ago and now be well on our way to sustained recoveryﾂ….We have wasted a lot of time and caused more pain than necessary.

Bush was running up deficits while the economy was in a boom. That turned out to be bad policy ﾂ― he should have been building a surplus and preparing for the inevitable cyclical decline.

 

[hsakakibara1]

Cyclical?

Personally, I hope we crush the banks if we go down again. There's really only one way to cleanse the system and that is to force the losers to lose. Unfortunately, we could have done this two years ago and now be well on our way to sustained recoveryﾂ….We have wasted a lot of time and caused more pain than necessary.
Bush was running up deficits while the economy was in a boom. That turned out to be bad policy ﾂ― he should have been building a surplus and preparing for the inevitable cyclical decline.

Perhaps it is not cyclical but that the US is on the way down for good! No country will be "up" forever. US has been on the way down since the early 1990s, and this trend has only accelerated, that is all. Obama, Bush, Clinton, none of them can change things that much. Living standards will drop even further and I see this every day.

 

[Elizabeth]

Perhaps it is not cyclical but that the US is on the way down for good! No country will be "up" forever. US has been on the way down since the early 1990s, and this trend has only accelerated, that is all. Obama, Bush, Clinton, none of them can change things that much. Living standards will drop even further and I see this every day.

LOL ! Are you a concern troll by chance ? Or a never done. Never done wringing your hands, moaning, complaining etc.

Number one or not, we still have to address the lessons of the crisis by enacting policies that promote crisis recovery and get as many people back to work as possible now in addition to financial-system reform.

History has shown that humanity has gone through some really bad times. But some how, some way we manage to struggle along. Pessimism truly is the last refuge of cowards. It gives you permission to do nothing.

 

[mobile1]

Huh .. characteristics of economic crisis may look similiar but USA is a heavy weight technological front-runner 900-lb gorilla has political clout and military muscle globally.In other words,America has more " cards in the deck " for any kind of financial manuveuring to put its economy back on track.
Economics 101,recession comes and goes.I wouldn't sell America short.

With the S&P500 having broken the resistance of 1040, and with the sovereign debt crisis and the poor non farm payroll data, we are in for serious deflationary times. You might see that Gold was not able to higher swing high and crashed on June 30, and has had trouble rebounding. But this bearish sentiment in Gold is not a sign of economic strength but rather as a result of deflation. You will see that we are temporarily having a bear market relief rally and should be retesting 10300 resistance or the 50 percent retracement from the June high before the leg down to confirm our bearish trend. To be honest, I believe that the Dow has reached 11200 for the last time, and we will be making lower swing highs and lower lows from now on until Dow reaches around 4000. The chances of making higher highs is no better than Japan reaching 40,000 on the Nikkei again.

My technical analysis is showing that we should have another crash around Labour day give or take a few weeks.

Perhaps it is not cyclical but that the US is on the way down for good! No country will be "up" forever. US has been on the way down since the early 1990s, and this trend has only accelerated, that is all. Obama, Bush, Clinton, none of them can change things that much. Living standards will drop even further and I see this every day.

Seeing what deflationary economy is like, you have a leg up in understanding Japan, because this is what the USA will be like. In a deflation, however, it is not all bad news. For the folks that live paycheque to paycheque like myself, I will have a chance to actually buy a house once again without necessarily paying a quarter of a million dollars. Average people will be able to afford a house and buy one not to speculate in, but buy one to live in, just like one would go and buy a car. You don't usually go and buy a car expecting to sell it for more than you bought it for right?

 

[Astroboy]

Lost decade: The new threat to the U.S. economy
The risk of a double-dip recession is getting a lot of attention, but even that grim prediction could prove a little too optimistic.

Japan suffered through bouts of deflation, in which falling prices caused businesses to cut production and employment, a scenario all too familiar to U.S. workers.

Deflation has been relatively rare in U.S. history, with no significant examples since the Great Depression. But with inflation nearly non-existent, some Federal Reserve policymakers said at their June meeting that they were worried about the threat of deflation.....
Lost decade: The new threat to the U.S. economy

As I predicted, USA is entering into deflationary economy. Needless to say, Europe is following US economy. In short, Japan was one-lap earlier than others. The reasons behind this are mainly due to Globalization.

 

[hsakakibara1]

LOL ! Are you a concern troll by chance ? Or a never done. Never done wringing your hands, moaning, complaining etc.
Number one or not, we still have to address the lessons of the crisis by enacting policies that promote crisis recovery and get as many people back to work as possible now in addition to financial-system reform.
History has shown that humanity has gone through some really bad times. But some how, some way we manage to struggle along. Pessimism truly is the last refuge of cowards. It gives you permission to do nothing.

That's right Elizabeth. Keep thinking that way. Akin to the Jews in Nazi Germany before things got really bad. Please read Bloomberg on a daily basis and I am sure you will see where so much of my thinking comes from.

You have a chance (if not already) to get the hell out. Later on it will get more difficult.

 

[Astroboy]

US agrees $6m pay cheques for Fannie and Freddie bosses
The heads of US mortgage giants Fannie Mae and Freddie Mac may each receive pay packages of up to $6m (£3.7m) for 2009, depending on company performance.
BBC News - US agrees $6m pay cheques for Fannie and Freddie bosses
I think .... this will NEVER happen in Japan. Though I don't have any specific data, annual income of CEOs of Japanese big companies, including financials (e.g. Mitsubishi Tokyo UFJ, Mizuho, etc.) must not surpass $0.5 million.

I found the article relating to the above.

Securities regulators began requiring Japanese companies to disclose pay for executives making more than 100 million yen ($1.1 million). While the headlines went to the top earners—foreigners Carlos Ghosn of Nissan Motor (NSANY) and Sony's (SNE) Howard Stringer—the big surprise was how few Japanese business leaders take home super-size paychecks.

Although pay for Japanese executives has more than doubled in the past decade, the government says, fewer than 300 people at Japan's 3,813 public companies earned enough in 2009 to require disclosure, according to PricewaterhouseCoopers. Companies listed on Japan's stock exchanges paid their chief executives an average of $580,000 in salary and other compensation last fiscal year, PWC estimates, about 16 times more than the typical Japanese worker. Average CEO pay at the 3,000 largest U.S. companies is $3.5 million, including stock options and bonuses, according to the Corporate Library, a research group.
Bloomberg - Are you a robot?

I think ... Japanese capitalism is more like a socialism.

 

[hsakakibara1]

Huh .. characteristics of economic crisis may look similiar but USA is a heavy weight technological front-runner 900-lb gorilla has political clout and military muscle globally.In other words,America has more " cards in the deck " for any kind of financial manuveuring to put its economy back on track.
Economics 101,recession comes and goes.I wouldn't sell America short.

Dream on. The US is all of the above in spirit, but has lost its edge in most )other than the military) in the past decade or so.

Yes. And that is why Japan is more livable than the US, with the whole population running after a lifestyle that can only really be enjoyed by a handful.

 

[hsakakibara1]

The Latest from SI

Both the US and Japan are covered this month.

http://www.investorsdailyedge.net/nl-strategic-investment/si_july10.pdf