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Are The US And Japan Monozygotic Deflationary Twins Reared Apart? A Slideshow Comparison
With millions of words already uttered and/or written on the topic of an inevitable convergence between the fates of the US and of Japan, there is a certain fatigue in the Broca area when merely the topic of deflation is uttered, which causes frontal lobe Na/K pumps to immediately downshift to half capacity. Which is why we have decided to present this far more easily digestible presentation of 39 pretty and contrast-colored slides prepared by Bank of America, titled "Is the US Becoming Japan" for all those who are of the visual learner persuasion and happen to still wonder how long before a Shinto shrine is erected in the middle of Las Vegas.
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Japan has still industry , has existed as such after WWII in the protection of the US dollar and Military. The US , having out sourced just about any form of industry and still has manufactoring trying to move to China, cannot be compared with a small island nation. When the US goes so goes all the wonta-be Japans of the world.
Japan was able to allocate their capital to industry because the united states provides for it's national security. They need to start paying us taxes for our 'protection!' The mafia was onto something.
The US would be very fortunate to escape this deflationary cycle with Japan's stats. I, however, am of the gumption that this will end more like that of East Germany.
this analysis is ridiculous.
the japanese experience of deflation simply can't happen here. amongst the many reason why:
1. the Yen was not the global reserve currency
2. japan's deflation happened within the context of a healthy and growing global economy
3. japan continued to expand exports throughout
its comforting to believe we're going to have a nice, long term, controlled demolition - but don't count on it.
And thats all that needs to be said on the 'US will spend a decade in the Japanese Deflationary Doldrums' scenario. Especially #1
+100
While there are a lot of similarities in the situations faced by Japan and the U.S., the response of the governments has not been exactly the same. From what I can see, it appears that only the U.S. has opted to debase its currency as a method of creating inflation to counter the collapsing debt. It doesn't seem to be working well so far so it looks like they might just try harder and harder until all of a sudden it all works and people get fed up and dump the dollar.
It's the USA's wettest of wet dreams to be as successful as Japan has been the past 20years. Sopping wet dream.
The productive industry of America was outsourced due to rising costs b/c of unions. The productive capacity was replaced by financial alchemy and the real wealth was replaced by a facade of wealth. The car makers were replaced with real-estate agents, the clothing makers were replaced with sub-prime mortgage brokers. This is why all our cars are made in Asian nations, and so are our clothes.
During this period we had artifically low interest rates by the Fed. This caused America to drain whatever savings they had and spend it on shit they didn't need. At the same time we had the government pushing the GSE's to provide loans to people who couldn't pay them back. I call this phenom "loans for votes".
So we drained our savings, outsourced our productive capacity, and encouraged irresponsible lending. The consequences of these actions will demolish this country.
There is no turning back. The game is fucking over and although the politicians will promise "hope and dreams" the fact is we will be drinking shit long after I am dead (and I am only 25)
True... but just imagine being an owner of say GM in 1967 and watch Detroit burn while the Unions demanded higher wages, and then even painted you as a bad guy? Little wonder the engines of capitalism saw a future in the safety of the CCP.
Unions are a difficult subject. There is a need for unions, however, unions can become malicious to an instituions well being.
For example, you don't want employees to be treated unfairly. However, you don't want employees treating the corporation unfairly. Is this justified for the UAW? http://www.blacklakegolf.com/
Thats what happens when government does Not demand that both parties settle the issue with the interest of the nation first.
The government did.
Almost all (major) industry has been nationalized.
We are now a socialistic society.
This presents a brand new challenge to this country. Totalitarianism.
No .. you are confusing the present bankrupt industry to one that was the world leader... at the time government let the Unions, and Industry settle without the nation as a whole being given priority. If the US government would have enforced a clear global picture that was in the Best interest of America the US would still be Number 1 and healthy.
I'm not confusing anything. The private industrial complex has either yielded to government sponsorship, or, has outsourced it's main capacity to other nations where labor is cheap. The federal government continues to do what is in it's main interest by growing itself into an unmanageable blob.
The central government gets bigger/richer. The citizen gets weaker and slips into poverty. The antithesis of what our founders championed.
Ok.. on that note you are correct, but still you are addressing this while the US is bankrupt. But what I am speaking of , if Our government was truly working for the people , us, not the Internationalist. than we would never have gone down thid road to begin with.. There are many monetary, military , religious and political reasons why we as a nation have drifted so far from our founding principals and one of these is the blind faith in free market forces. WE the people need our interest protected when it is industry and commerce. Of course everyone one wants to make the best -most amount but as a nation we must have representation.
The federal government pushed the free market into the abyss. The free market fell into the abyss. The free market no longer exists.
Germany has unions and did not gut their own industry. The flaw in the US economic plan was not in having unions, it was in not permitting rebalancing of capital flows. Under supply and demand, when US citizens spend dollars on foreign goods, prices abroad go up relative to US. Dollars are available to foreigners to purchase US goods. Dollars then get spent on US goods. The cycle repeats.
Once we closed the gold window to permit limitless dollar printing (under President Nixon and further refined under Reagan), we devised a system whereby massive amounts of dollars were not allowed to flow back into the US (where they would produce inflation). Instead they were recycled into US Treasury debt instruments (IOUs). So a system of one way flow of dollars abroad emerged, supported by money printing, with no balancing counterflow, creating a massive bubble of US debt in the hands of foreigners. We're paying for it now.
No comparison. Germany is part of a union that gutted it's industry. Whether or not it created a healthy economy is useless as the cancer will eventually spread to Germany.
+1 (coming from a German!!)
I agree with what you are saying except in the unions part.
Unions should not have any government involvement. When unions are government sanctioned entities like they are now, they become political weapons and not workers associations.
Bank of America now comes in children's tablets, with scary descriptions of the deflation boogeyman. Each pill is time released to help Americans understand why we should pay our debts to the banks while the dollar is still worth something.
+1. And if you won't borrow and go deeper into debt bondage, the government will borrow for you and sign your name on the loan. Back to work, debt slaves.
Madcow
SDR is the wet dream unfolding. Plug in your numbers.
http://coinmill.com/SDR_calculator.html
Plug in your rates, which will change tomorrow.
1 USD = SDR 0.663416
SDR Interest Rate = 0.3%
http://www.imf.org/external/np/fin/data/param_rms_mth.aspx
Pats you on the head, your a good sheep. LOL
Lately I've had this strange craving for rice for lunch, dinner, and breakfast. This article provides an explanation.
The Euro Crisis and The Coming Euro Collapse- Pardigm Lost
http://israelfinancialexpert.blogspot.com/2010/08/uri-dadush-on-euro-crisis-and-coming.html
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I'm getting The Vapours.
gold gets a mention, once. . on page 32
best comp to Japan is demographics. Japan's in 1990 was nearly identical to US 2001 when in both countries the 40-45 yo group peaked leaving a gaping hole behind them. When the prime consumer cohort shrinks nothing much anyone can do. US' 45-50 group peaked in 2006 bursting the house bubble.
JAP & US POP PYRAMIDS
http://img413.imageshack.us/img413/3628/usjappop260820100283.png
Yes there are many differences between Japan's deflation and ours. Economies are quite different, the time period was different, national priorities also different.
My prediction: within the near future, Japan's deflationary decades will look like the good ole days to both Japanese and Americans. We won't be so lucky as to go through a period of benign, controlled deflation. Instead we'll have the more virulent kind with epidemics of defaults and bankruptcies, big time unemployment, and perhaps the social ills that go along with that. Worse, both the US and Japan will face a double whammy with rising structural costs despite a deflating economy. How both countries handle the monetary and fiscal responses will determine how bad things will get. There's no indication yet that they get it.
This article misses the key effect of the yen carry trade and why it happened.
Japan could have interest rates at 0% for so long without having significant price inflation because it "exported" the inflation. The interest rates in the rest of the world were higher (there was no crisis) and therefore it was profitable to borrow in Japan and invest in other parts of the world, this is basically the reason for the carry trade. Therefore the new money was not channeled towards Japan, but towards other parts of the world. Japan could do this without significant price inflation because of his export based economy that offset the inflationary pressures of the yen carry trade.
But the situation now is different. All the countries in the world have low interest rates, and there is no incentive for the massive carry trade that the USA would need to repeat the Japan situation. The new money will start leaking in the internal economy driving prices up.
Thx Tyler and BofA.
Seems to me though that their arguments for why the US is different is maybe a touch weak.
Not sure what slide 15 implies. Little help?
The Fed front-loaded everything at the outset that the BOJ tried over a decade+: ZIRP, QE, FX intervention. This created a nice sugar-high, but looks to have failed at this point.
US political support for crazy is on the ebb. Japanese voters seem endlessly tolerant?
Demographics and credit picture have real similarities. The age structure of Japan does seem to make it more politically accepting of the adverse consequences of deleveraging than the United States. As the baby boomers retire, they will be more comfortable with it too.
Housing in the US hasn't even seen all the trouble yet... but that 2030 number is breathtaking. House prices have declined, but banks require more downpayment so those price decline effects are muted.
no, the two countries are not twins....but they are raised by the same evil wicked stepmother - the international bankster elite centered in the rockefellers...
Missing the point folks, the piece makes comparisons but argues why we will NOT wind up like Japan. Doesn't really matter, what does matter is shorting JGB as Japan is on the road to default within 36 months. Can't say you weren't warned!
China is propping up the the likes of Japan and Australia but China is propped up by its exports and stimulus. When europe and u.s. go down, everyone's deflating.
The difference between China and the U.S. is that very probably there are convertibility problems with the Yuan vs. the U.S. dollar, which is the world reference currency.
Besides that, they have a similar gini co-efficient.
The one salient difference is that there is no bond market to speak of, unless of course the HK bond market is operating outside the aegis of communist party control and relates more to the west than the mainland.
As a general rule of thumb perhaps the commercial banking sector would have liked to have seen China become another Japan of sorts and were aiming at that kind of a sweeping development.
http://en.wikipedia.org/wiki/Gini_coefficient
There is no goddamned Japan Scenario for the U.S. Japan survived thus far because
Granted, there are similarities:
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