How Long Can Japan Play The Endgame?

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pagan's picture

" But these measures will only kick the can down the road, though kicking a can on the road is precisely what you don't do in Japan."

Why not? They've been kicking the can for 20 years now. Why can't they kick the can for 20 more years?

dalkrin's picture

Well-composed, thought-provoking article on the woes, possibly death throes of this small yet influential island nation.  Bears worthy lessons for all of the world, especially those of us in debt-dependent industrialized societies.  Makes me wonder if Japan would succumb to a hyperinflation malady when confronted with the dissonance between it's planned entitlements to retirees and the current sagging stream of active worker contributions and JGB purchasing.  I guess you have to be one of the Nihon people to feel compelled to place your money in a long-term government instrument that pays laughable interest rates.

johnjb32's picture

This is great -- if isolated -- analysis by Zero Hedge. There's no mention of Fukushima, the radiation poisoning that's killing the country, or Japan's shrinking electrical generating capacity. And Japan is a vital organ of the global economy. -- Michael C. Ruppert

AdahPrice's picture

The Great White Buffalo.

People need food and room for a roof.  Ultimately, only the land and the water can support people.  And when there isn't enough, they destroy the land and water they have, by overfarming, overfishing, overpolluting, and overbuilding.

According to

Japan has 873 persons per square mile, and the USA has only 83 persons per square mile.  So, Japan still has way too many people.  Long-term, Japan, by lessening its population, is doing what it must do.  But it has a long way to go.

In the meantime, when you have 5 people and only 1 job, is it not better to have all 5 people do the 1 job than to have 1 person do the 1 job and the other 4 people sit home watching television?

Now if the Japanese can just switch from those old uranium-type Fukushima-type nuclear plants to safer new thorium-type nuclear plants.  Now, THAT's an infrastructure program which might be worthwhile.

Also, when people stop saving, it is because of inflation.  Why save $2,000 now, if that $2,000 is worth 5 ounces of gold now, but you suspect that by the time you get to retirement age, it will be worth only 1 ounce of gold?  All you would accomplish is giving the government 4 ounces of gold, or 80% of your hard-earned savings.  Any time the people realize that the government/Central Bank is creating huge amounts of debt/fiat-money, they know there is going to be inflation, and they stop saving.

snowball777's picture

The biggest threat to Japan right now is the global (dep|rec)ession...most of their public debt is held internally, but they can only service it with a world to buy their wonderful exports. That world is about to go <poof>.

Apostle of Unknown's picture

Having lived in Japan for a long time, I totally concur with the author. Japan's 20-year Ice Age and "disciplined" buildup of debt has a huge cultural X factor written all over it. The image of legions of public workers in shiny uniforms, intensely communicating over walkie talkies and filling out paperwork on how to best fill a tiny pothole in some cul de sac is Japanese fiscal spending at its funniest, but also at its worst. It's true, Japan-style credit deflation is happening all over the world right now, but don't expect the same outcome. We won't receive slow waterboard torture in some lukewarm outer circle of hell for 20 years like the Japanese did. We will move to our own endgame much, much quicker.

TomJoad's picture

One of the better written and more readable articles to appear on ZH for a while. I realize it is written at the lay level, just wanted to say thanks and "well done."

Bicycle Repairman's picture

"We will move to our own endgame much, much quicker."

What will the USA do differently?

The4thStooge's picture

The whole island is uninhabitable now anyway.

Vlad Tepid's picture

Yeah, that's right.  What the hell is TPit talking about?  Didn't he get the memo that the entire Japanese race is dead <sarc>

Rastadamus's picture

That.... was awesome. Now how about that radiation???

janus's picture

from one of the greatest simpsons episodes ever:



(who ever heard of a poison pork chop?)


snowball777's picture

It's called trichinosis.

janus's picture


janus is a fan of the wit of snowball...a dedication to the same.

Mitzibitzi's picture

You ain't met my mother in law!

dolly madison's picture

It seems like the economy going to crap all over the world might just be what happens this long after the industrial revolution.  There was lots of real work at the start building all this up, but people don't really need the endless streams of crap that constantly growing GDP require. 

besnook's picture

japan has the equivalent of infinity bonds, a finance alternative to greenbacks. the demographics of japan doom it but i bet hardly anyone knows what a sen is. that's what the yen will be in thirty years but by then japan will be another province of china.

Vlad Tepid's picture

This probably isn't the place to get into this demographics argument but I have to rebut it everytime I hear it.  Populations are shrinking across the world and not just industrialized countries...look at Iran's numbers.  A shrinking population is a GOOD thing.  The Japanese will cure their unemployment problem through old age, they will reduce their external demand for energy and food (not to zero but anything less is a bonus), and a smaller population will mean an increased living standard for the remaining Japanese.  Where do you get this idea Japan is screwed because of demographics?  Assuming we aren't ALL screwed by war/famine/economic stupidity at the highest levels, the only negative to a shrinking population level is the inability to feed a social secutiry Ponzi scheme.  Yes that will fall apart in Japan.  And when it does, TPit will still see Japanese workers in funny uniforms paving every crack in the street.

BigJim's picture

A shrinking population is a GOOD thing.  The Japanese will cure their unemployment problem through old age, they will reduce their external demand for energy and food (not to zero but anything less is a bonus), and a smaller population will mean an increased living standard for the remaining Japanese.

Sorry, all things being equal, a nation's wealth is determined by its workers' average productivity. If the average productivity is declining - because a smaller proportion of them are creating wealth - than so is the wealth being created, per citizen.

Of course, this ignores factors like wealth (re)distribution, ability to forestall the pain by borrowing, holding a reserve currency, etc, etc...

VyseLegendaire's picture

This is completely asinine and backwards logic.  The population is getting older and the youth are being disenfranchised specifically because of errant government policies.  If the people really wanted to be free, they wouldn't in their wild nightmares build the long deflation death-trap that they currently have.

What a hilariously pernicious way to try and 'look at the bright side' of a genuinely problematic situation. 

Vlad Tepid's picture

I'm afraid I fail to see your logic, or, more accurately, what you are trying to say.  How is the population of Japan getting older specifically because of errant government policies.  Are you advocating euthanasia or something?  

Deflation is not Japan's problem. Deflation is a boon to an ageing population because it allows greater access to goods on a smaller income and rewards savers, of whom Japan's elderly are some of the most famous.  

Just out of curiousity, can you give me a time in Japan's modern history when they youth were "enfranchised?"

This demographic pig will be passed from Japan's python in 30 years or less and they will come out stronger for the interim? Sure, that economic death-trap thingy you mentioned.

besnook's picture

i agree with the essence of your arguement. increased productivity means lbetter technology needing fewer labor units.  fewer labor units ultimately means less need for production. since japan has always relied on exports the effects of a declining population could possibly mean more wealth if exports remain the same or increase. once the glut of old japanese passes on the the remaining japanese will be extremely wealthy(given a multitude of unknowns being constant). i think the yen will eventually pay for all the stimulus with inflation as the system eventually reverts to the mean. the thirty year lag will and has been a treasure chest for economists and phd candidates.

Vlad Tepid's picture

That is indeed what I'm saying (but you said it better.)  I think many people are using quaterly reports for blinders and failing to see any largerpicture or trend.  Another plus is that Japan will be through the "fogey phase" before just about any other nation and that may accrue in their favor.

snowball777's picture

It's not the size of the population, but the distribution of ages among same that matter; a graying nation has more liability than ability to finance it (unless you're willing to go "Logan's Run" on their geezer asses).

magpie's picture

No one will know what cents are in the near future either.

AnAnonymous's picture

How long? As long as the USD  lasts. Japanese since WW2 deprived them from their capability of direct extortion, are extorters by proxies. They have nested their own debt within the US debt, meaning that as long the US can go deeper into debt, Japan will be able to go deeper into debt. With the bonuses in wealth and standard of life going with it.

John_Galt's picture

Over consumption, pointless jobs, mountains of Government debt etc. all true but Tokyo and Japan as a whole is damn nice place to live! All the fun of London, Paris and NY but with a near zero crime rate, an extremely (and some would say overly) polite and considerate community and the most efficient transport system in the world. its no wonder the rate of Japanese' young leaving to study abroad has dramatically declined over the years, they switch the TV to riots in Europe, repression in China, possibly innocent people being executed in the US. Why would you leave? Sure Japan is on an unsustainable path but who isn't these days?!

Freddie's picture

Tokyo has 4 reactors worse than Chernobyl about 90 miles away. Why would you leave?

Bicycle Repairman's picture

Now you've gone and done it.

Vlad Tepid's picture

Japan's institutional inability to jump on this gold-as-money train is going to be regretted in Tokyo in the future.  Aside from the US and the UK, most other countries are starting to "get it" about gold, even at the CB level.  Japan?  Not so much.  They still seem to be star-struck with the Anglo-American as they have since the Opium Wars and Commodore Perry's "opening."  They should have been moving that $1 tril in foriegn exchange into gold, but instead they are a deer in the headlights. They are certainly not their grandfathers.  Japan went to war with the US after the Roosevelt froze their gold in storage and prevented continuing oil transactions.  Looks like even Chavez learned that lesson.

yabs's picture

an example of why keynesian  economics is claptrap

but did we learn?

matrix2012's picture

Yes, i do care... better care about the japan collapse than care about the american idol, chefs, bitchy housewives, cardassian sentinel (as in start trek??) :D lol

Sequitur's picture

Heh I care. I'd much rather people read this report on Japan, than watch bullshit like Real Housewives or that Kardashian clan -- do they even have a tv show currently? (Rhetorical, I don't know or care.)

Bicycle Repairman's picture

And the elephant in the living room?