Stupid Stuff

Bruce Krasting's picture

I’m amazed that Japan has not yet hit an economic reef. At over 230+%, the country’s debt to GDP is so far out of whack that I keep thinking that something has to give. I’ve been wrong for years.

The trend lines for Japan are awful. A decline in total population coupled with a rapidly aging society is a recipe for slow or no growth. Japan is the world leader in these critical statistics. I don’t think there is anything that Japan can do to reverse its social/economic future. Projections on the critical variables for at least the next ten-years continue to head south.

It's not as if the Japanese are unaware that they are headed for a debt train wreck. They have just passed new tax legislation that could make a meaningful contribution towards stabilizing Japan’s debt to GDP problem. But the new law is a sham. The new taxes will never get paid.


Japan has a consumption tax today of 5%. The new laws will raise the tax to 8% in 2014 and 10% in 2015. Moody’s thought this was a great idea, and said this about the tax hikes: (Link)


"it is an essential component of Japan's fiscal consolidation goal, achievement of which we consider necessary to maintain market confidence in Japanese government bonds."



But here's the joke; in order to get the votes to pass this very controversial legislation, there is a critical stipulation that the new taxes will not come into effect unless the country is increasing GDP at a minimum rate of 2% a year (or nominal growth of 3%).


There is no chance in hell that Japan will achieve the triggers. The folks who passed the laws know that. I think Japan deserves the annual award for the most heinous “kick the can down” tactic. The following chart shows how Japan has limped along for the past 20 years. Note the GDP performance over the past decade. What are the odds that it breaks 2% anytime soon based on the prior track record?



How’s Japan doing today? Is it on it way to achieving the all important 2% GDP target for 2013 (the trigger for the 2014 tax increase)? Not a chance. From the FT this morning:



Moody’s warned about the possibility that the taxes would never be levied:


the gross domestic product growth targets contained in the new law remain an area of uncertainty


How hard do you have to stretch a rubber band before it breaks?



On the Good Efforts by the SEC


The SEC made an important announcement this morning:



The SEC is just now getting around to hiring some people who might have a clue what is going on in the capital markets. Mr. Berman, the head of the office Analytics and Research acknowledged that the SEC had no idea what was actually happening. From the interview with Tradersmagazine (Link):


the SEC learned it was unprepared to sift through the mountains of market data in the current high-speed, rapid-trading marketplace of today. That was evident when it had difficulty understanding what happened in the market on May 6, 2010-the day of the "flash crash."


So two plus years later they get to thinking that they need some “smarts” on board? The SEC gets the award for Rank Incompetence.



No Inflation


Both the Fed and the Treasury have made comments on the tame inflation outlook as the basis for monetary/fiscal policies that potentially have inflationary implications. They have relied on a Cleveland Fed report that measures expectations for the future rate on inflation.


Not surprisingly, the folks in Cleveland are using a measuring stick that says the all-important “expectations” are very low, about 1.25%.


I look at the multi-trillion US Government bond market for a better measure of what those expectations are. The Tips/Coupons spread tells a different story than the nice folks in Cleveland. From Bloomberg – (Link)



The hockey stick higher starts on July 26. That was Draghi saying that he would print to the moon. The second leg higher was Bernanke saying that he was going to act in September.


Like I said, Bernanke ignores the market’s measure on expectations. But I’m absolutely certain that the Chairman, and all of the other Fed Governors, have the market measure of expectations somewhere on their screens. So they are well aware of the fact that the market is now forecasting inflation above the Fed’s target of 2%.


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UGrev's picture

You can only accomplish driving a 1million dollar car on a "plumbers" salary (if you will), if you are involved in illegal, black market, types of money schemes. I.E. Drugs, Guns, Sex.. not necessarily in that order and not necessarily mutually exclusive either. In fact, it's probably all 3 at the same time. 

On the outside, you should appear to be broke if you owned a 1mil car on a plumbers salary, but on the inside, it's a disco balls baby!.. and drugs, guns and sex etc.. 

Jim in MN's picture

And just because, Another Day at Fukushima:


1.  Unprecedented mutations in insects discovered

"It has been believed that insects are very resistant to radiation," said lead researcher Joji Otaki from the University of the Ryukyus, Okinawa.

"In that sense, our results were unexpected," he told BBC News.

Prof Otaki's team then bred these butterflies within labs 1,750km (1,090 miles) away from the accident, where artificial radiation could hardly be detected.

It was by breeding these butterflies that they began noticing a suite of abnormalities that hadn't been seen in the previous generation - that collected from Fukushima - such as malformed antennae, which the insects use to explore their environment and seek out mates.

Six months later, they again collected adults from the 10 sites and found that butterflies from the Fukushima area showed a mutation rate more than double that of those found sooner after the accident.


"This study is important and overwhelming in its implications for both the human and biological communities living in Fukushima," explained University of South Carolina biologist Tim Mousseau, who studies the impacts of radiation on animals and plants in Chernobyl and Fukushima, but was not involved in this research.



2.  Another radioactive leak, another fire....yawn....just another day at Fuku


Tokyo Electric Power Company has reported a radioactive water leak at the Fukushima Daiichi nuclear plant's Number 4 reactor.

The utility says a worker patrolling on Tuesday morning found water one-centimeter deep across a 350-square-meter room on the first floor of the turbine building.

The water apparently comes from a pipe running along a corridor outside the room. The pipe carries contaminated water from the adjacent Number 3 reactor to a storage facility.

Workers later detected radioactive cesium at about 77,000 becquerels per milliliter in the water. TEPCO says there is no evidence the water has escaped into the environment.

Also on Tuesday morning, TEPCO workers found white smoke rising from a pump in a storeroom. The room houses equipment to filter radioactive substances from water. The workers used an extinguisher to put out the fire. The company is investigating the cause.

Aug. 14, 2012 - Updated 09:35 UTC (18:35 JST)

onlooker's picture

----Regarding food prices----

Last October I got $2.10 a pound for a calf. Now it is $1.50, down 25%. However it is up in the store. The drop in price to the rancher is due to severe draught and the sell off of herds. Grass is in bad shape and hay is very high and getting hard to find. The cows that can not be profitably fed are going into the auctions and they are going to slaughter, not trucked to better grass areas, like last year.


The depletion and slaughter of herds can not be quickly rebuilt. Expect drastic increases in beef prices over the next few years.

boiltherich's picture


Hillshire Farms smoked sausage was $2.50 for a 16 ounce rope last year (admittedly on sale) yesterday it was on "sale" for $3.99 for 13 ounces.  Do the math, that is an increase of 100% from 15 cents per ounce to more than 30.  And I can name a dozen items I used to buy on a regular basis that have doubled or nearly doubled in the last year or so.  A lot of it makes no sense, like sugar, it is 20 cents per pound this morning but a five pound bag at the market is $3.28.  That is one dollar for the sugar and $2.28 for the bag.  Coffee, why has it doubled in price?  I was paying $6.99 a can for Yuban in a 2 pound 12 ounce can, now it is $10.99 for one pound fifteen ounces.  Did the MSM forget to report on the demise of the coffee plantations? 

The point is that anyone who thinks inflation is tame is full of bullshit and we need to start speaking up about it or we are going to find ourselves a lot worse off than we already are.

mbarido's picture

This comment tends to proves my post elsewehere (anecdotal, of course):

SURE, has anybody thought about inflation making the numbers bigger because food and necessities are up every month?  Why does people not look at numbers after even lie inflation numbers are used to adjust.  I guess, just wake me up when the revolution party starts.  Just saying......

Cultural Capital's picture

In all seriousness, what difference does being over 1% of a country's debt to GDP vs 100% or 1000%?? These figures are so arbitrary.

Why can't the FED and the Bank of Japan just agree to buy each other's debt unequivocally for fixed terms. Such as 6- months or 10 years. How can a core-economy hyper inflate in the age of the internet? I mean, seriously. I don’t see any “magic number” causing a catalyst for change, especially in an era of such global political paralysis.  

Cosimo de Medici's picture

Japanese are becoming a collector's item.  A shrinking population, resulting primarily from the aversion Japanese women have to a life of "meishi, furo, neru" (food, bath, sleep....the three words a Japanese salaryman says to his wife after "Todaima") makes them a dying breed.  A decimated pension system, wild amounts of debt, and a national savings rate that went briefly negative in 2011 until post-tsunami Japanese began saving again, do not bode well for the future, though Kyle Bass may not live to see his bets pay off.

Much of Japan's earlier success resulted from The Greatest Theft in the History of the World.  Jack Kilby, working for Texas Instrument, invented the integrated circuit back in 1959.  He and TI applied for worldwide patent protection, including in Japan, in 1960.  Japan's MITI, while going through a very lengthy patent approval process, provided every major Japanese company, from NEC to Hitachi, with the patent data, which these firms then used to produce the electronics goods that allowed Japan to rise from the ashes of WWII.  With no licensing fee to pay and no developmental costs to recover, Japan could undercut producers who were forced to endure those costs.

MITI finally granted TI the IC patent in 1989.  By then the Nikkei was 38,915.87.  It no longer walks that lofty level.

DR's picture

So when Japan dies who inherits the island? The US or China?

cougar_w's picture

I had a patentable invention, and looked at going through the process. After seeing the costs (huge) I asked the guy what would happen when the Koreans read about my invention via the application process and started making it before I could secure the funds and resources to make it myself.

He said, my patent gave me the power to sue them. Another lengthy and costly process.

We can all see how that guy makes money from me being inventive.

I never patented the invention, nor did I produce it. I made one version for my personal use and I enjoy it a great deal, every single day.

And all's well that ends well.

falak pema's picture

Talking about Japan...look at this amazing article on Aussi banking :

The Entire Eurozone Financial Sector Is Now Smaller Than Australia's - Business Insider

If this is true what does it portend for Aussi banking if China and Japan hit the brakes big time. There is already a question that the RE market in Aussi land is heading to bubble territory. Will the Aussi banks with highly leveraged BS encounter a subprime type situation like in Spain today?

Panafrican Funktron Robot's picture

This is relevant to Bruce's discussion regarding Japan and "how much longer it can go on", the answer of course being "as long as countries like Australia have interest rates that are higher than zero", ie., as long as the carry trade is viable somewhere, Japan can continue indefinately.  The trick, of course, is countries like Canada and Australia have already hit the wall and are likely less than a year out from ZIRP4EVA themselves (I mean, shit, even the Swiss are ZIRPed).  I guess the hot money will go to... Turkey? lol

hannah's picture

bruce....japan was able to keep going for decades because the usa kept buying their crap. now that we have hit a wall and we cant buy anything, they will finally fall off the cliff. least thats my opinion.....

fourchan's picture

same goes for china X1 billion

Bear's picture


The US needs a consumption tax ... we need to drop a tax on income and warmly embrace a consumption tax. We don't need to be a overwhelming consumptive (70%) nation since we already have so much of everything we need. I am not some socialist troll or a Mother Earther, but I do believe that should we switch from an income to a consumption tax, our nation would begin to save again, replenishing the capital base that has been sucked up by the squid patrol. Elimination of the income tax will really encourage entrepreneurial investment and bring back a work ethic that was lost a while back. If we add a consumption tax to what we have now we are toast, but eliminating it will make our world turn positive on a dime. Alas, a singular consumption tax takes away an elitists power chit to payoff cronies via one of the 74,000 pages of tax code ... we will never see it.   


Amagnonx's picture

You are debating chlorine gas, or cyanide gas - compulsory taxation is theft.  Where is the contract that you agreed to be taxed?  Where did you agree to be owned, and have your labor belong to someone else?


I often see people talking about 'waking up' - if you still think that its ok for the govt to use force to take your property, then you are a long way from being awake.


The govt should simply send soldiers into peoples homes and steal their money - that is stealing by force, and it is exactly what they are doing now, yet that method would at least be honest and even the dumbest people could see it for what it is.

clawsthatscratch's picture

I much prefer we confiscate the wealth of anyone who has ever worked on wallstreet or at a bank in a exe level, not their income, all of their assets and redistribute them back to the rest of us and then find the nearest lamp post. You might as well throw in anyone who went into gov and came out with a net gain.

Amagnonx's picture

If we ever have justice, and people finally understand whats happened to them pover the last 200+ yrs, then we might even consider reclaiming all the wealth that has been stolen through fractional reserve banking and inflation - that would wipe away the wealth from many powerful families - chopping off their heads would then be just gratiutous - fun and just, but uneccessary.

Panafrican Funktron Robot's picture

Another version to consider, this is basically FairTax + TobinTax.  I'm o.k. with this since it kills HFT (which is why it will probably never see the light of day lol)

Svener's picture

I'm not disagreeing but if the tax is on consumption won,t the wealthy just do their consuming in a foreign market where there are no consumption taxes. How would that work?

the tower's picture

Simply add import tax on imported goods.

Bear's picture

Consumption Tax = Fairtax by different name

BeetleBailey's picture

...and what's wrong with that Bear? Nothing.

FairTax is an idea who time has long come.


Eliminates the fucking IRS

Eliminates the need for accountants for the most part (90%) of them

ELIMINATES all this political douchebag wrangling and hood-winking that is played now.

Thus, it eliminates subsidies, tax loopholes and all the hijinks going on.

The "pretax" inclusion makes it fair for the poor, and it amazes me that many smart people on here aren't calling for it.

Read the book. Forget that Neil Boortz wrote it; he's too partisan. In fact, a good implemented consumption tax that is FAIR for everyone is exactly what we need.

O'Cuntus and his hench-douches "said" they studied it (a lie) and came to the conclusion that it was "regressive" (which is another lie, as these fucking bastards want to rig the system/keep their power.)

O'Cuntbag keeps saying "fairness" - when he doesn't mean it at all. The fuck.

O'Cunthole says this - then he hikes cigarette taxes 161% - and who smokes? The poor.

Talk about regressive - the fucking bastard.

Getting Old Sucks's picture

Will there be a provision in there for people like me?  I live exclusively on after taxed savings.  ZIRP is bad enough but having to pay a tax again on what was already taxed is far from FAIR.

Getting Old Sucks's picture

You don't have to answer that.  I went to  People like me get fucked.

boiltherich's picture

Disabled vets get fucked as well, my income is exempt from income tax because it is treated as an out of court settlement for injuries, that is replacing a loss, but I still have to pay sales taxes and property taxes and such. But, so called VAT and sales taxes are regressive because tens of millions of people spend almost all their income on basic necessities where a rich guy can in theory get by on the same expenses, one is spending 10 or 20% of income on taxes though they have a very small income, the other is spending 0.005% of his income or even less, THAT is not fair either and it will not work, you cannot plug a revenue hole with a consumption tax. For one thing the revenue holes are larger than even a 25% tax could fix.

The only "fair" taxes are those that tax in proportion to the ability to pay, income taxes, estate taxes, and wealth taxes, sales taxes would be fair if they were limited to big ticket luxury items, but it has been my experience that as soon as a government imposes a sales tax they start to calculate how much they can raise it to, and whatever they exempt is a temporary break to make the levy more politically palatable, the exemptions are soon enough eroded and the tax just goes up and up and up. I remember when sales tax in California was 3%, what incentive did the legislature have to control costs when they could just raise sales tax to 5% then 7%, then 7.5% and 8% and in some counties over 10%?

Nobody in actual poverty should be paying a dime to support a system rigged to keep them from opportunity. Those that have achieved wealth need to understand that they did not do it by themselves as they like to so proudly crow, they had a lot of help from their childhood vaccinations and schools to the roads and water supply they so freely use, this nation and all it's bounty belongs to all of us and if it is to remain livable the burdens that come with it must be shared, meaning those that have it will pay up or get out.

BeetleBailey's picture

100% wrong boil....check  the bolded areas for your answer....

Consumption taxes are less damaging to an economy than income taxes. Income taxes tax productive behavior (work, saving, investing, etc.), thereby reducing the return/reward for that behavior. They, in essence, punish people when they are contributing to society.

Asimple, Flat Income Tax is not the answer. Because it will remain neither for very long. It will just allow all the tax favors to be bought and sold all over again, which will exacerbate today's corruption of our representative form of government to the point that our representatives too often represent special interests rather than their constituents. [I am not opposed to a flat tax, as I will address below.]

"In addition, the Flat Income Tax would only slightly reduce compliance and efficiency costs (as all records must be maintained and returns filed) and it would continue the practice of imbedding taxes in the prices of the goods and services that citizens buy. Today, an average of 22% of the producer price of all American-produced goods and services are taxes imbedded in the price. This practice of imbedding much of our tax burden in the prices of our products places American labor and business at a great competitive disadvantage with foreign labor and businesses. In essence, a Flat Income Tax would have no long-term benefits and could delay true tax reform for a generation.

[While I am not sure of whether it is exactly a 22% embedded tax cost, it is certainly high. There were several objections to a VAT because it would be a burden on businesses. I would note that ALL taxes are a burden. Others objected to a VAT as being a burden on consumers. As Roger points out, consumers are already paying a great deal in hidden taxes on what they purchase. Either the Fair Tax or a VAT can be structured to be revenue-neutral and eliminate the other embedded costs. What both proposals do is eliminate nearly all other taxes, including Social Security, which adds directly back into both employee and business income.]

"Now, let's compare two consumption taxes: the Value Added Tax (VAT) proposed by Marc Sumerlin and Larry Lindsey in their book and the Fair Tax Act that is now before Congress with over 70 cosponsors and the subject of two best-selling books. Both proposals replace the current Internal Revenue Code and are revenue neutral. The Fair Tax (HR 25) replaces the income tax, Social Security & Medicare taxes, and death and gift taxes with a retail sales tax. [As does the VAT.]

"Actually, Sumerlin and Lindsey's VAT and the Fair Tax have much in common, but the differences are critical.

*Both proposals replace the current Internal Revenue Code

*Both are revenue neutral

*Both tax final consumption only once

*They have the exact same tax base, if they both have no exemptions

*Business to business purchases are not taxed

*The full amount of the tax is paid by the consumer

*Both improve U.S. international competitiveness, as neither of them taxes exports, and are border-adjustable

"How are they different?

"The Fair Tax has a prebate, so that no individual pays taxes on their personal consumption up to the poverty level. This eliminates the perceived regressive nature of a consumption tax. The $100,000 personal exemption of their VAT serves a similar purpose, but everyone under their VAT will pay imbedded taxes that are even greater than they are today.

"The Fair Tax collects the tax at the retail level, which is simple to understand and comply with. Only sellers of goods or services for final consumption (retail businesses) file monthly sales tax returns. This would reduce tax filers and compliance costs by about 90%.

"The VAT, on the other hand, is collected from all businesses at every stage in the production process. Each business has to keep track of what taxes they paid on their purchase of inputs and subtract it from the tax they owe. This is called a credit-invoice system. It is complex record keeping and especially difficult for small businesses who don't have in-house tax experts.

"The Fair Tax is transparent, the amount of the Fair Tax being clearly stated on the retail receipt. VAT retail receipts may state the rate of tax, but they generally do not state the actual amount of taxes paid. The visibility of the Fair Tax provides the natural restraint on the size and reach of government intended by our Founding Fathers.

"European countries have tried to solve the perceived regressive nature of VAT taxes by creating all kinds of exemptions in attempts to make necessities tax-free. This opens the door for more and more exemptions, and vendors start gaming the system to qualify for the exemptions. These exemptions and gaming add to the already high cost of compliance under a VAT and encourage the buying and selling of tax favors, similar to today's corrupting trade in tax favors that occurs in the U.S. under our income tax system.

"This combination of the Fair Tax Prebate (monthly payment to every legal household which offsets taxes paid on spending up to the poverty level, similar to today's personal exemption on our income tax return) and taxing ALL consumption at the same rate creates a consumption tax that treats everyone the same, is transparent, and is much simpler and much less costly to comply with. In addition, it eliminates the argument for exemptions, as all necessities are not taxed. That is the genius of the Prebate.

"There is no evidence that the Fair Tax will encourage tax evasion via black markets or barter systems. In fact, the compliance rate for the Fair Tax, projected to be around 94%, is expected to be many times better than the 69% of the current tax system. Some of the reasons the Fair Tax will have a high compliance rate are:

"Major corporations account for over 90% of all retail sales today, with 3.6% of corporations collecting 87.5% of all sales taxes (I don't think I'll be able to convince the clerk at Walmart not to charge me the tax),

"Items most likely to be subject to barter are used goods, and used goods are not taxed by the Fair Tax,

"Under an income tax or a VAT it takes only one individual to cheat on a tax return, but under the Fair Tax both the seller and buyer must cheat (Would you like to go to jail for me?), and

"Because the Fair Tax reduces the number of collection points by over 90% (just retail businesses collect the tax) there will be considerably more audit capability by the government on those collection points.


"With over $23 million in research on the Fair Tax, it is one of the most researched public policy issues in history. The many studies on its economic and social impact can be viewed at


Getting Old Sucks's picture

A Lot of data there except:  How much in already taxed savings will the government be taxing again? seems to avoid that whole issue.  They would have to start out with a one time 23% of balance deposit into the accounts of all after taxed savings, MM, CDs etc.  That would break the treasury.  Everyone with savings becomes a sacrificial lamb.  As if ZIRP isn't bad enough.  

boiltherich's picture

BB, I would move away to avoid a VAT and so I am glad that is not what is being considered here, but as I said before, I pay no taxes to the federal government because they compensate me for a loss sustained in the line of duty, they simply skip a step by paying us less but then exempting the income from taxation. If we had to pay a sales tax or VAT they would have to increase our pay commiserate with that expense.

And I stand by my opinion that sales taxes are never going to fund the government, they might offset some expenses but I know that I would stop buying all but the most basic necessities if I had to pay a punitive sales tax, and even then I would be looking for ways to go around that expense. I moved away from California, my home state, to Oregon because Oregon has no sales tax, at the time it was 9% back home, moving here was like giving myself a 10% raise because gas was also 40 cents a gallon cheaper and the state of Oregon does not charge disabled vets for camping, hunting, fishing, or car registration.

The real problem with high taxes are that they cannot cover spending which needs to be brought under control. Something that is not going to happen with our debt based fiat legal tender.

BeetleBailey's picture answer your questions as best I can;

1) Your income will still be exempt (as all other income taxes/medicare taxes/SS..the works. EVERYONE gets 100% of their paycheck - no more auto-withdrawals - ever.

2) Rhetorically - is it "fair" that you pay ad valorum taxes to fund other children's schools/other people's non-payment?

Is it "fair" that some pay no income tax at all and others do?

Is it "fair" that you pay taxes for others? (SALES, STATE, SPECIAL LEVIES, ETC.)

Is it "fair" that some companies get tax breaks and others don't?

Is it "fair"?

Fair tax works. You buy it - you pay tax. You don't you DON'T. Period.

Obama is fond of using the word "fair" when the shit-eater doesn't mean fair; he means UNfair.

One of my clients is an expert on the fairtax...he has studied it over and over....knows most all the answers....

I, for one, am sick and fucking TIRED of paying taxes for others to benefit off of. Sick and TIRED of seeing the percentage of people payine NO income tax growing (nonwithstanding, your rightful exemption/in the line of duty).

booboo's picture

Sell debt to to a country with ageing demographics who are used to womb to the tomb nanny state care, raise consuption tax to raise credit worthiness to sell more debt, okaaay, Mr Takagomi drop the crack pipe and slowly back away from the edge.

malek's picture

If a government has a strong incentive to achieve higher GDP rates, it will happen. At least according to the official statistics.

SEC Create New Data Analysis Group

Best of luck to them.
I'm a data guy (more on integration than analysis), but that job is about the last I'd apply for.

MrSteve's picture

Japanese households and the government have done very well being bailed out by the FRB. The US needed Japan to hang in there with us, so with Japanese bonds paying 1% and US rates at 4-5%, households borrowed billions in yen monthly and bought US treasuries and collected the spread, just like the US banks in the FRB system do now. Now we call it financial repression when we are on the bank's short end of the stick, back then it was a "favorable" yen carry trade.

The Fed has been fighting deflation everywhere- Japan then, now Euroland and US bank assets.

It's what they do...for the benefit of everyone if you would believe the Big Ben. I don't.

Bear's picture

If Japan can have a demographic nightmare lasting 20 years and still bubble along the bottom without a plunge ... can the US muddle along for another 10 without serious consequneces? If the Saudis keep accepting dollars for oil, I suspect that we can. But, come the Revolution we're toast

Bruce Krasting's picture

The US is different from Japan in a number of important ways. We have natural resources, and total population is still growing. But we have the same problem when it comes to a rapidly aging population.

Japan stumbled through for 20+ years with rising debt and no growth. But things are not so bad for the average Japanese. Much better than for most Americans.

The US will go through the process much faster than Japan. I think our ability to maintain things past 2020 is a real question mark.

Angus McHugepenis's picture

Hmmm.... I wonder how a shitload of radiation from Fuckyoushima will affect future growth in both Japan and the rest of the world.

BeetleBailey's picture

I concur Bruce.

What is holding up the Yen is hot air and fear. It amazes me that the Yen strengthens each time there is a "crisis".

THE DORK OF CORK's picture

No Growth ?

Priced In US $s its GDP did grow.....a lot !!!


Its in much better growth shape then Italy for example.

And people are better off because its GDP per capita must be much higher given its static population.


A high goverment debt ratio in a sov goverment simply means its banking system is less leveraged and therefore can do less malinvestment damage to its economy.

Bear's picture

Thanks for the response. I almost agree with you about the rapidity and not lasting to 2020, but I believe that 'events' will determine our fate. By events, I mean negative occurrences that diminish the world's reliance on petro dollars or the complete abandonment of them. Should this happen, we will suffer big time as all the dollars return to the US as surely as the swallows return to Capistrano. However, until this happens I think we will see a slow leaching of our assets values, receding average worker's salaries and an abasement our purchasing power with near zero interest rates (ala the JY) for years to come.

Should the Black Swan tarry the can will continue roll down hill with ever increasing velocity without needing to be kicked.

What do you see in store for us approaching the apocalypse? 

malek's picture

No, we don't have the same problem, as in same scale.

Compared to Japan, Germany, Italy and a whole lot of other countries, the US problem is miniscule.



the tower's picture

There are 4 issues:

1. Japan, Europe: inverted age pyramid > not enough people to sustain growth and pension systems.

2. Developing world: too many people to feed, too many people to base a consumption-based economy on > it's IMPOSSIBLE to have every chinese, indian, brazilian, african person to consume (cars, property, water, food) on a developed world scale. Even the developed world can't continue with it..

3. USA: energy, education > although the age pyramid is not tilted as much as Europe and Japan there is a huge problem with the "cheap oil" based economy (only sustainable through a - deminishing - reserve currency) and education. Wages are way too high compared to economic output. Too many foreign talents are needed for innovation. Not enough local production means total dependence on outsourcing, putting the USA's independence at stake. No country should be in that position.

4. World: water, food, energy.

A complete overhaul of our economic, political and social system is required, but the debt crisis is preventing us from working on the real problems, as are our selfish interests (we are human after all)...

Seems to me a total crash is needed to survive as a species, because only after a total crash we are willing to forget our selfish interests and focus on what's needed... When humans come together great things happen, when we are left to our selfish instincts destruction is what follows..

Mountainview's picture

One question: Who keeps the US population pyramid in shape?

the tower's picture

Until now the USA has been an immigration country - and immigrants usually have bigger families - but to balance the ever faster tilting age pyramid the USA would have to have much higher immigration than now, which would cause social disruption, like in Europe.

Eventually the same problem will hit the USA and the same solutions will have to be applied. Immigration is not one of them.

Robotics and automation are solutions to stop dependence on outsourced production, better (and cheaper) education will stimulate home grown technology.

Mountainview's picture

Robotics are great but don't reduce unemployment and the owners of the robots may not finance the old and sick.

Immigrants are a mixed blessing! Maybe "Make more childs!" should be taken up by politicians..

the tower's picture

Unemployent is currently an issue but won't be very soon, trust me.

We will need all the hands we have to do the work and only robotics will help us out.

And the last thing we need is more people on this planet.


rlouis's picture

Ben lied. What else is new?