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The US-Japan Congruity Explained By David Rosenberg In Ten Easy Pictures
Much has been said about the parallels and differences between the Japanese and US experience. Today David Rosenberg chimes in in an original fashion, and instead of providing the latest rambling discussion, shares ten simple pictures. Quote Rosie: "Consider the charts below the equivalent of 10,000 words explaining why the U.S. post-bubble economic and financial backdrop is looking more and more like the Japanese experience of the past two-decades."
The equivalent of 10,000 words follows:
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Yes, but the stock markets in the US are up, so it must be a recovery, right?
I feel a bit as though I'm waiting for Godot, the drop will come, except will it?
DavidC
it's simpler than most argue.
it's deflation in domestic economy (wages (billions of people to do the work), r.e. (if you can't finance it you can't sell it.), etc.).
it's inflation in imports (i.e. non dollar assets).
BTFD
Is it not kind of an evidence that Japan, as it was predicted, dominates the world?
The biggest bully in the courtyard, namely the US, is adopting the Japanese model... What a copycat.
As Robslob said, BTFD. If the last few months isn't enough proof for you, there is non that will surfice.
This shit is Bananas B-A-N-A-N-A-S!
One big difference:
Japan's massive quantitative easing and deficit spending STARTED 5-8 years after housing credit in Japan troughed.
The US started while the credit bubble was bursting.
So does this mean the US will go through the Japan experience in high-speed?
Or did Japan's failure to act in a timely manner result in its 'lost decade' or two?
We'll get to hyperinflation much faster than them. Whether we get there first with their 20 year head start is another question, though.
There's more than one big difference: Japan has an industrial base which gives them trade surpluses. We don't.
Global Reserve Currency.
Global Empire.
No Domestic Savings.
No Export-Based Cash Flow.
Rosie? Rosie? Hello?
Really good work, and round numbers like '10' are pretty catchy, but I would like to see one more chart that compares the real, negative capital positions of the Zombie banks - the capital positions that make lending impossible, and the need for interminable government support:TBTF BS
Just BTFC.JPM.BAC.WFC
...and VFROD (vote fucking republican or democrat)
I must have missed the charts of the Nikkei vs S&P, the Yen vs $...
I wish this would be over with so the real depression could begin. All we are doing is prolonging the pain and making the inevitable pain that much more difficult. But until it matters, buy them all.
*EXCEPT* !!!!!!!!!!!!!
that the US is still in the 2nd year of this multi-decade process, WITH THE BIG LEG DOWN YET TO COME
IDIOTS
All we've done is skim the froth off the broth, which The Ben. Ber-nank promptly re-bubblified [technical term] :P
Weak article... showing a bundle of deflating asset bubble charts do not make them the same at all...
The US will Hyperinflate - Japan will Deflate.
The Japanese Yen went from 680 yen to the £ to 130 currently over the lost decades.
Against the USD from 268 to 83 yen to a dollar.. Of course if your currency appreciates continually against all your primary trading nations and you have an aging demographic that saves fastidously, supporting the other end of their own governments debt... you get decreasing prices.
Currency destroyers who have no form of savers in their demographic Golf ball of boomers who cant even have a positive savings to consumption rate never mind buying under yielding government debt from their own country, will destroy their debt, Japan produces and exports in a net sense.. buys in steel and sells cars and electronics.. America exports commodities and buys in Japanese goods (Chinese too).
People confuse a good stock market with a good economy, The stock market is re-rating for hyperinflation in weakening dollars and improved export outlook on real foreign currency multiplier effect ala Macdonalds etc..
Sick of 'US = Japan' arguement... only thing deflating in US is overpriced property/job availability/Long Bond values and its general prospects. Japans currency strengthened throughout its crisis The dollar after another fake strength 'run' will be destroyed under its debt levels..
PS for those who say Japans 200% to GDP debt levels? where does that leave the US at 600% GDP when unfunded Liabilities of Welfare, medicaid etc.. are unaccounted for.. wholesale reneging on commitments await bye bye boomer middle class you blew all your cash on the never never.. you deserve what comes your way if you failed to set aside..
Future Generations should not carry free love generations..
Finally why does ZH post a Hyperinflation post right after this deflation drivel... 'Fence sitting' for either way I told you so's?
I'm really looking for a sound hyperinflation argument to challenge my intuitive US deflation. Your post didn't do it. What are the mechanics of a depreciating dollar and no demand that would drive hyperinflation. Or is your argument that Japan saves and the US will spend. How do we spend if 20-30% are unemployed and the rest are crushed by debt. I understand that loose monetary policy has allowed the US to spend more but that trend is ending in a classic deleveraging.
What I would suggest is that deflation is the likely course unless there is a loss of confidence in the currency entirely (hyperinflation). Hyperinflation is plausible because of the run-up in commodity prices, ie., you might have net deflation due to the continued drop in housing prices in particular, but if there is a big run up in price of food and gas, a revolt against the dollar could conceivably commence. I don't think this is particularly likely though. Regardless, there will be some great entry points in the investable real estate area upcoming probably in the next 12 months. Blood in the streets is fast approaching.
Providing you are Cash or near cash buyer, very patient.. as lenders hindinsight wise and Rates will rocket when the now small inflation monster is so big it can no longer be hiiden by 'jimmy'ed' stats.
Also you will have perpetual stream of ex home owner tenants being fiscally destroyed and become bad payers.. suggest you choose areas really well and still expect greater forced delinquencies..
Neither of you mention wage inflation. That is not happening in the US, nor has it happened in Japan. Deflation it is then. Go back to Weimar Germany and wage inflation was rampant. Even in the big 70's, stagflation was accompanied by at least rising wages. How many employers do you know (don't say investment banks, please) where wages in aggregate are going up ?
Health care, the feds, and many governments are raising wages and benefits, very quietly, but on the whole I agree. No inflation without wage increases; while all classes of real estate tank.
Japan imports nearly all of its oil, and almost everything else except rice. Hopeless demographics. They get to crash first.
No wage Inflation due to high levels of Unemployed does not mean no inflation is in the system...
It means in real terms everyone is getting squeezed as damaged over indebted corporates recapitalise at cost of workers vulnerability.
As commodity prices continue.. cost of living will go to far up and specialist skill areas first wages will start too climb and then in more mainstream work.. you are just failing to recognise the 'reverse Goldilocks effect that is the 'Yin to Greenspans inspired Yang'.. where everyone got a wealth effect from fake asset appreciation and leveraging up... First everyones living standard will rerate downwards in real terms before eventually keeping pace..
You will be too late to benefit if you await proof of this eventuality..
As deficits cease to be tolerated, given the huge balances O/S, currencies will have to deflate till there is a greater natural balance between Imports & Exports... thats a big eventual fall for the $ and huge increase in costs of commodities due to Currency destruction..
Inflation is currency Destruction --- price increases is just the Symptom high lighting that the effects of your currency collapse.. things got exceptually expensive in Zimbabwe ( I own a Z$25,000,000,000.00 note its expiry date has passed), because of economic policy of printing and Currency destruction the above note buys one loaf of bread.. the price of bread in South Africa has been stable over the same period.. it has nothing to do with wheat and everything to do with currency destruction the US's chosen path, plus misinformation by measuring the wrong things in all new inflation measures..
Sizes of portions by major retailers are being reduced and prices kept at 0% shows no inflation, do some Youtube searches (Also on ZH) countless examples of such Value smudging.. loo rolls come with 10 less meters at same price.. don't be fooled.
Currency Destruction is Inflationary - It will eventually show in the prices --- The Yen appreciated throughout its crisis... The Dollar will devalue through its crisis... Don't Let the Euro's/GBP coinciding weakness disguise this fact.
All emerging Market Currencies Not just AUD & CAD it is including politically compromised nations Like South Africa are appreciating to the $, nevermind Bullion which has rocketed against the Dollar. No Gold boom occurred during Japans crisis as no Currency destruction took place.
ZH has already posted across the board Soft/Energy commodity charts before in $ terms inflating between 14% to 70% in a single year, you want to buy there 'new measure' at 1.17% Inflation go right ahead...
The nations that peg/dollars are getting blowtorched.
Ben = Pimp drink up that inflation bitchez'
Do you have to use "blowtorched" to describe everything?
Translation = 'I am as happy as pig in my own pooh, that spiting my nose on my own face is also causing people who trusted US's cartakerdom of world base currency...to bleed, and that we will mutually destruct until they stop believing we were a responsible nation'.
Wow he must be real proud citizen..
I suggest too many viewings of Saw 3 is behind the Blow torch infatuation any other theories..Cue Moron Flaming session on all fronts.
Seriously, What the fuck is "inflation excluding food and energy" supposed to mean?
And while your at it, can somebody explain to me why CNBS is going to broadcast "60 minutes?"
I feel like I'm on crazy pills.
Simply because oil-derived energy (gasoline, heating oil, etc.), and calorie-derived energy make up such a tiny part of our daily lives.
iPods & Crackberries, on the other hand, are declining in price, and they are far more important than gas or bread.
Rosie is such an asshole... :)))))))
look at chart 5.. budget deficit/GDP..
well well.. in Japan bubble burst in 1990, still in 1990 -1991 there was actully budget proficit..
take USA, somehow Mr Rosenberg starts w/ 2001 ..
why ????????? housing bubble burst in USA in 2008, and as soon as deficit/GDP spiked upto 8-10%...
point is this analysis is junk.. for stupid ones
Mr Rosenberg still want you to believe to expect 20 years of
up/dwn markets in USA, so buy bonds and make Rosie happy/fat/and RICH.. nothing can be further from true..
i'd say 2, max 3 years of 8-10 deficit/GDP ratios,, debt will
be 18-20 trln$ ..and end...
whole USA is giant leveraged up hedge fund... waiting to burst... as soon as 10yy rates spike up 5-7-9 %,,, game over..
1/2 of budget goes to serve only interest on debt, thus more printing, more rates and on on..
WEIMAR ahead..
alx
ps
dont tell you wasnt warned..
Did you really just say "budget proficit"?
We have an illiterate savant on our hands...
The dollar being the reserve currency, is all that is holding the scheme together. Seems everyday there is something in the news about the rest of the world moving away from the dollar..
Shadow stats have Inflation at 8.6% by 1982 measure abandoned as a measure for showing the true picture so that we could all focus on Non food non energy measure..LOL..
8.6% with rates at 0% - = Hyperinflation.. Volker understood killing the monster whilst it is small is important.. no doubt his standing down announcement highlights that the snowball and beast are both half way down the hill and about to crush the village.
UK switched from RPI to CPI preferring talk of 3% over nigh on 5%... a bit more currency devaluation and we will both be in double digits.
No Deflation apart from leveraged Alice in wonderland assets..
So where is the chart talking about exports vs imports and the savings rate of the people and the % of external debt financing?
Hell I can compare myself to a young Brad Pitt very nicely if I'm allowed just to bring up facts that support my argument and ignore all others.
But love everyone who listens to the deflation argument. Ignore the printing press and buy those bonds. Help Zimbabwe Ben keep this game going. Your sacrifice will be remembered!
@Shameful
v. good points..
++
yen rate is strange beast too... weak yen is good..
Japan stuff ( best stuff) is v. competitive..
strong yen is even better..
fucking , hard working japs, built 1st rate economy w/ out
any trace of natural stuff.. all is imported.. (exlc rice)
thus stronger yean , import is cheaper.. steel/oil/chemical/etc
so... i guess japs will hang on a while more.. not sure about
USA.. what a pity..
alx
Really interesting those ten pictures, but do you really expect deflation in US?
I see more likely price drops in assets and surges in prices of food, precious metals, etc.
Stagflation?
Precisely.
Simply cannot be an apples and oranges comparison here. All kinds of things have changed globally (at the fastest rate of change also) in the past 20 years.
Japan is the greatest "false" success foisted upon a people. They are suffering terribly for it already. An empty success, really. Their social fabric is so tight, ready to rupture.
America's suckess in the last 10 years especially is almost entirely based on fraud. No deflation here (for bubbles that is), they will burst. With all the focus POMO is putting on open market intervention by the Fed, something will give. it's the bond bubble that will burst, furst. Out of left field, then the house of cards collapses in earnest.
The whole thesis is meaningless. Apples to oranges.
ORI
http://aadivaahan.wordpress.com/2011/01/11/rockpicker-via-comments-on-stairwell-sigtar/
One big difference is the time periods. Japan RE and Nikkei collapse, and expansion of the central bank balance sheet was offset by nearly a decade. In the US, it is all happening at once. Bernank's position is that this is the panacea (i.e. Japan acted too late)... I'm still not convinced.
The drop will come. When? When the chararade of globalization is revealed. When is that? I don't know. The first real sign will be when Italy rejects its bail out and banks take their hair cut.
proficit means advance in latin. these charts are just an advanced form of three card monty.