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The economic fallacy of 'zombie' Japan

Astroboy

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The economic fallacy of 'zombie' Japan
Paul Krugman and others have got Japan wrong: Americans should be so lucky as to get a Japanese-style lost decade

Reopening the case of Japan raises some important questions. How do economists such as Krugman decide what to value and prioritise, or what to measure? What is an economy for? To produce the prosperity, security and services that people need? Or to satisfy economists and their equations, theories and models?

The economic fallacy of 'zombie' Japan | Steven Hill

This article is near to my thought "Don't trust Nobel-prized economist".
 

Is it that they ar wrong knowingly or unknowlingly?

I believe the latter as such smart people would know enough to take all sides into consideration. I believe it is all part of the plan for dissemination of incorrect information.

Just look at the recent article on Reuters about the recent gay parade in Tokyo and gay rights in Japan. We gays are relatively free and enjoy good lives. Yet the Western media continue to protray our lives as hard.

All this is part of ther bullshit "East vs West" campaign with "West" always coming out smelling like a rose and "East" coming out like garbage. They do this all over Asia and I am tired of it. It is time we pushed back!
 

Hsakakibara; if you want a economist who actually looks at the "other side" then you probably want Paul Krugman. He's a very thoughtful economist who actually looks at quality of life across the social spectrum. If you want a economist that is less concerned with these issues, then look to someone like Martin Wolf of the Financial Times.

The problem with Japan isn't so much its quality of life. Its the fact that if the same economic situation was repeated in the United States it would have far worse consequences for normal citizens. Japan has low population growth and a relatively prosperous population. It could afford, and even desire, a deflationary trap and poor economic growth. With deflation, the aging population's fixed income and savings go much further than before, and Japanese exporters could ship cheaper products.

In the United States you have a young, growing population, which requires growth in order to satisfy demands. Deflation, low growth, high debt load and lack of investment would result in stagnating wages and high unemployment. This would cause severe social dislocation as Krugman pointed out in a previous article.

Much of this went far over the head of the Guardian's reporter in his article. Instead he made a very superficial attack of an individual who actually is actually concerned about the very issues he raises.
 
Oh please, if there is any country I wouldn't want to emulate - its Japan. It's a country where numbers mean nothing - Japan's employment figures are a complete fabrication. It's salary figures were dreamed up. It's quality of life estimations are skewed by social indoctrination and the spirit of you'll suffer and love every minute of it, or else.

It's no longer a secret that the Japanese government had been hiding key statistics and lying about the situation for years - Japan's poverty rate is almost level to that of the US. Saying that Japan doesn't have income inequality has to be one of the most ridiculous things I've heard in a long time - but I guess that's what you get when you believe the overpaid politicians who get to make this crap up.

Let's also remember that the government in in shambles - there is no stability, no direction, and at all levels corruption and outrageous levels of ineptitude exist. The health system is in critical condition, social security is going to implode (that is if they can remember who gets paid what), and if that isn't enough Japan's deficit alone should be enough to give you pause.

But yeah, if you ignore that I'm sure the Japanese economy is going great!

Edit: I missed this but...

This country also scores high on life expectancy, low on infant mortality, is at the top in numeracy and literacy, and is low on crime, incarceration, homicides, mental illness and drug abuse.
Click to expand...

Mental illness? Have you even seen the suicide rate here!?
 
Ewok85 said:
Mental illness? Have you even seen the suicide rate here!?
Click to expand...

So you believe suicide rate is accurate, but others are not.

I think this article says ... "Americans should be so lucky as to get a Japanese-style lost decade", not Japan is a paradise.
 
Astroboy said:
So you believe suicide rate is accurate, but others are not.
Click to expand...

You can't argue with a pile of dead bodies - either Japan has a high suicide rate, or the homicide rate is horribly misreported. If the suicide rate is under or misreported, or even overreported we have an issue. But even if it is accurate we still have an issue - it's a statistic that isn't that important.

I think this article says ... "Americans should be so lucky as to get a Japanese-style lost decade", not Japan is a paradise.
Click to expand...

Yeah but thats like saying "I'd rather a poke in the eye than a kick to the groin". They've hand picked several statistics that look nice on paper and to a degree are OK, but without looking at the fine details (Japanese employment rates do not consider under-employment for example, long term Social Security is facing major issues, etc etc).

Japan is a powder keg and I'm very worried that the ineptitude of the government along with the apathy of the voting public is going to let things decline to a point of no return.
 

Partly agree.

Considering death toll as died prematurely or died before natural death, death toll will be the sum of suicide + death by car accidents + killed by someone + war fallen + starved to death + maybe others.

In some countries, quite a few people are killed by guns every year, while suicide death is not so high. Maybe people in that country do not go suicide as they are mentally-healthy, and thus suicide may not be a social problem, but crime must be a social problem from my view point.

Maybe Kill Others, instead of Kill Myself.
 
Folks, it's not exactly rocket science: demographics play a determining factor in economic growth; since Japan's population growth stagnated since the mid-to-late 1990s, its economic growth slowed down accordingly.

I recently read a book written by a Chinese businessman with decades of experience working in the Sumitomo trading co. In the book, he argued that the concept of "lost decades, Japan is finished, zombie economy…etc" has been enthusiastically promoted by the Japanese economic establishment as a deliberate strategic move for Japan Inc. to present the outside world a weak facade and conceal its actual economic strength and preserve its unique capitalist system. From a historical perspective, Japan seems to be at her best when she was underestimated by her opponents-I'm sure Kublai Khan and the Imperial Russian Navy can attest to this fact.
 
Tokugawa Ieyasu said:
Folks, it's not exactly rocket science: demographics play a determining factor in economic growth; since Japan's population growth stagnated since the mid-to-late 1990s, its economic growth slowed down accordingly.
Click to expand...

Horse, Cart?


I was very impressed by the failing banks, rising public debt, record suicide, poverty and homeless rates!
 
Japanese Bonds from Paul Krudman's blog

As usual, pure speculation was reported as fact:
For jittery investors, Japan's rising sea of debt is the stuff of nightmares: the possibility of an eventual sovereign debt crisis, where the country would be unable to pay some holders of its bonds, or a destabilizing collapse in the value of the yen.

The only evidence given was a bump up in 10-year bond rates, to a horrifying, um, 1.4 percent. Here's what has actually happened to those yields since:


Yes, Japanese long-term debt is now yielding less than 1 percent. Oh, and the CDS spread is more or less comparable to other non-Italy G7 countries.

We (USA) are facing a slow-motion catastrophe because policy makers were afraid of the wrong things.
http://krugman.blogs.nytimes.com/2010/08/18/japanese-bonds/

His conclusion is US government should not stop stimulus package. Never mind soaring government bonds as it's not real national debts in case of Japan. Krugman is understanding MY advice
 
Here is an interesting article in the Economist:
"Why Japan is A Zombie Economy And Can Never Come Back"

I think this is much ado about nothing. For the past two decades Japan has coped with it's deflation, has kept it's people working for the most part, and has basically survived quite well which puts quite a dent into economic theory that states that an economy will suffer a mass depression, massive unemployment and basically implode if deflation is allowed to take place. I haven't seen that happening in Japan although quite a few are still predicting it.

Many pundits love to say that Japan's debt is near 200% of GDP and say it's worse than the US, but what they fail to point out is that all of that debt is internal based on the high Japanese savings rate. In effect, the Japanese government is borrowing from the Japanese people whereas, the American government is borrowing from Japan and China. Quite a big difference and one which is ignored.

Although their system is archaic and slow to change, they must, and I believe will, change in order to survive. They may be #3 or even #4, but their high tech expertise as quoted above will allow them to survive as China surges ahead in overall GDP. China must first take care of their 1 billion people, two thirds which still live in poverty, before they take on the world.
 
More like SPEAK FOR YOURSELF



I agree 100%. This is all a lot of over-exxageration. s bad as it may sound, I rarely believe anything about Japan/Asia that comes out of the US or any of the other Anglo countries, expecially Oz and England. It seems they have for Japan a sort of special hate relationship, after all Japan lost the war and then came back to whoop their butts economically.

I often go to Japan as well as keep up with the news through friends and relatives while living in the US. I must say that Japan is much better off. We are investing heavily into Asia and are far ahead in investments there than many of the Western countries. We are also ahead technologically from the West with the exception of certain military and computer hardware areas, and even in the latter we are just a sliver behind. Now, with Japan set to become a military exproter, our technology in that are will also soar.

Demographically, things are not great but not that much wore than other industrialized countries. As we make it easier for woomen to work after marriage, as well as allow more blue collar workers into the country permanently (Japan is already easier to immigrate to than America and the UK for wihite collar workers), then out population will be rising again.

One thing to note, Japan' standard of living was never as high at the US. We are used to doing with less. It is America that wil need to pay the price in the very near future. No, Japan is no paradise but we are far better off in the long run.
 

The greatest lies and fabrication are here in the good old USA. The whole place is based on madness of spending and will implode next year - 2011, and if we are all around that time we will see it. While people point to Greece we forget that 48 US states are in far worse shape. The real unemployment rates are more like in the 20s, and most people live a couple of paychecks away from bankruptcy. I have no doubt that in the very very near future the foreclossure and bankruptcy levels will soar, making 2008 look like a picnic.

That is why so many better-informed and wealthier citizens and residents are making for the door. That is also why the government plans to put new taxes of wealth transfers abroad.

Get ready for the big crash.
 

I doubt you'll have a crash but something more like the slow sizzle that Japan experienced.
 
Ewok85 said:
I doubt you'll have a crash but something more like the slow sizzle that Japan experienced.
Click to expand...

The difference between Japan and the US is that after all is said and done Japanese balance sheets, both corporate and household, on the whole, are in good shape. Yes, Japan is no way the super powerhouse it was in the 1980s but then again neither are the US or Europe or Oz. Also Japan is a trade SURPLUS nation, and one where the debt is funded internally.

A lot of waste occurred due to pork spending, but a lot of that is coming to an end. Japan sill is far ahead of the US in most technologies, and in general standard of living. Don't be fooled by the suicide rate. This is more cultural than a sign of deterioration of living standards.

So Japan will be more-or-less OK in years to come. But we will have to bow down to China and possibly India.
 
Who's Afraid Of The Ratings Agencies? from P Krugman blog
I wonder how many of the people saying this know that Moody's and S&P downgraded Japanese debt in 2002, with Moody's actually putting it below Botswana and Estonia.
And 8 years later, Japan can still borrow at less than 1 percent.
Who's Afraid Of The Ratings Agencies?

In short, "Don't trust Anglo-American rating firms !"
 
All you need to do is look at who pays the rating agencies. Remember subprime?
 
Dogen Z said:
All you need to do is look at who pays the rating agencies. Remember subprime?
Click to expand...

Very true. So which criteria/standard should we use then ? Any suggestion would be appreciated.
 
Astroboy said:
Very true. So which criteria/standard should we use then ? Any suggestion would be appreciated.
Click to expand...

I don't know but not that beloning to any Anglo country. Their era of world domination is coming to a close and they CAN'T STAND IT!

Wheather it is Japan, China, India or any other non-Anglo, non-Western nation, they will find a way to fault them. It is always this "East vs. West" mentality when in fact it THEY are the ones in decline.
 
Astroboy said:
In short, "Don't trust Anglo-American rating firms !"
Click to expand...

When JGB was downgraded below Botswana and Estonia by Int'l rating firms in 2002, Japan's Ministry of Finace released a statement as follows:

1) In the case of industrialized countries such as the U.S. and Japan, defaulting on local-currency denominated debt is unimaginable. What kind of risk is exactly contemplated as "default"?

2) Ratings of sovereign bonds should not be assessed solely by fiscal indicators, but comprehensively and in the broader context of the economy at large, inter alia economic fundamentals. For example, how are the following factors evaluated:

a) From a macro-economic viewpoint, Japan has the largest savings surplus in the world.
b) The above enables us to finance most of the debt domestically and stably at very low interest rates.
c) Japan has the largest current account surplus, is the largest creditor country, and has the largest foreign exchange reserves in the world.

3) Consistency is questionable comparing various sovereign ratings. How would the following be explained, e.g.?:

a) A country that has a per-capita GDP of about 1/3 of Japan and suffers from a large current account deficit is, in fact, rated higher than Japan.
b) The U.K. foreign-currency bond was rated AAA in 1978, only two years after the sterling crisis and Fund borrowing in 1976. U.S. Treasury bonds maintained AAA status in the mid-80's when the sustainability of the U.S. twin deficits was suspect.
c) Should JGBs be downgraded to single-A, this would assign Japan to the same rating as emerging market countries with wide gaps in economic fundamentals.
http://www.mof.go.jp/jouhou/kokusai/p140430e.htm

And as far as I know, Int'l rating firms have not made logical expnanation to J-government yet. And as you know, Japanse government can still be borrowing at less than 1%.

The Irish Republic has had its credit rating downgraded by a leading ratings agency, Standard and Poor's (S&P).
Click to expand...
Irish credit rating is downgraded

But I advise Irish government not to take it serious consideration about the ratings as S&P or whasoever is just a empty-brain.
 
That is why this whole thing is nonsense. The Western media usually paint Japan (and other nonWestern nations) in an unfavorable light. But we know that the real cause for concern are the ecnomies of the US and Europe. Especially America, where 45 states are said to be worse off than Greece.
 
"Paralysis at the Fed" from Krugman Blog
Ten years ago, one of America's leading economists delivered a stinging critique of the Bank of Japan, Japan's equivalent of the Federal Reserve, titled "Japanese Monetary Policy: A Case of Self-Induced Paralysis?" With only a few changes in wording, the critique applies to the Fed today. Opinion | Paralysis at the Fed (Published 2010)

As I said in my previous posts in other threads, what Ben Bernake and Fed should do now is what they gave "lectures" to BOJ some 10 years ago. I wonder why they don't.
 
Astroboy said:
Paul Krugman and others have got Japan wrong: Americans should be so lucky as to get a Japanese-style lost decade
Click to expand...

noyhauser said:
Hsakakibara; if you want a economist who actually looks at the "other side" then you probably want Paul Krugman. He's a very thoughtful economist who actually looks at quality of life across the social spectrum.
Click to expand...
The only problem with Krugman is that he doesn't go far enough in pointing the finger directly at who is most responsible for the problem we are in today. He talks a good talk and seems to hit the right buttons, but he stops there without actually pinpointing the problem and that is that the government, including the politicians and the president, answer to a higher power and that is the big corporations, Wall St., and the Fed. The Fed in turn answers to an even higher power and that is the IMF and World Bank.

Japan didn't listen to them, and rightly so. For the last two decades they have fared far better than the US has after two years and probably another 20 to come. America will not survive this as many like to say they will. We produce nothing and without anyone to sell to there is no survival.

The popular financial pundit, Max Keiser probably said it best in a recent interview to a German reporter in a story entitled "America: a walking dead-zombie country" :


Astroboy said:
As I said in my previous posts in other threads, what Ben Bernake and Fed should do now is what they gave "lectures" to BOJ some 10 years ago. I wonder why they don't.
Click to expand...
The reason why they don't I mentioned above. They take their orders from someone else. Their first job is to destroy the American economy while keeping Wall St and big corporations from losing money with the stimulus money paid for by the American taxpayer. They will flood the US with more money out of thin air ("monetary easing"), increasing inflation before they let deflation take over as it did in Japan. Japan survived, but America won't. They could change their minds after tomorrows meeting of International Central Banks in Wyoming, but I highly doubt it. Things will probably only get worse.
 
Pachipro wrote: "The reason why they don't I mentioned above. They take their orders from someone else. Their first job is to destroy the American economy while keeping Wall St and big corporations from losing money with the stimulus money paid for by the American taxpayer. They will flood the US with more money out of thin air ("monetary easing"), increasing inflation before they let deflation take over as it did in Japan. Japan survived, but America won't. They could change their minds after tomorrows meeting of International Central Banks in Wyoming, but I highly doubt it. Things will probably only get worse."

This is very frightening but it is true. I am afraid that when the US sinks it may have severe adverse effects on other nations. Yes, Japan will survive, but we may become slaves to Chindia (China and India). That is one reason, I have heard, that Korea is now softening their stance toward Japan. They are afraid of China as the super, super, super power of the earth.

Here in the good old USA, so many people are withdrawing funds from their pensions to pay their debts and avert foreclosure. I fear that a very great wave of new foreclosures is on the way. I think the party will come to an abrupt end next year. That is when I will get the hell outta here. A smaller place to live in in Japan is better than a larger place here in the US. Just as a small cabin on the Carpathia was better than a luxury suite room on the Titanic.
 
Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here
Speech, Bernanke --Deflation-- November 21, 2002

Ben Bernanke said in his speech in 2002;

He was very confident of avoiding Japanese-style slump (aka Zombie Japan) because Japanese problems are caused by political constrains rather than policy intstruments, while USA has not.
 
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