Japan Syndrome?

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Dwig's picture
Dwig
Status: Silver Member (Offline)
Joined: Mar 4 2009
Posts: 141
Japan Syndrome?

The Los Angeles Times recently printed an article by Steven Hill (I'm not familiar with him entitled Don't scorn Germany and Japan; learn from them, in which he argues the case that the currently popular sport of Japan-bashing is badly misleading, and gives evidence for the proposition that they're doing much better than they're given credit for, and that we should be learning from them.

Here's a quote from near the end:

Unfortunately, there is a common-sense aspect to this that gets lost amid all the headlines. Two of the lessons of our times are that economic bubbles eventually burst, and that the environmental consequences of unbridled growth are severe. U.S.-style trickle-down economics doesn't work anymore.

In other words, it's no longer strictly about economic growth; it's about sustainability and learning to do more with less. The world needs to figure out how economies can provide for their people without relying on destructive bubble-driven growth or overheating in a Venus-like atmosphere. This is not an easy challenge, yet it is the path that Japan, Germany and others have chosen. Americans would be wise to learn from them.

Anyone have any insight on this?  Is Hill missing something important?

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Japan Syndrome?

Hello,

Thank you for posting that article! It's quite interesting to see someone write about how Japan is not so bad after all. Well, I am not saying everything is fine and rosy, but things here still work, for now, sort of... (I live in Japan BTW.)

I have made two main observations about the situation here, which seem to make a lot of sense to me. The first is that people actually work and produce "stuff" here, and that is what is keeping the economy afloat and the yen strong. The second is that, as long as quantitative easing doesn't affect too much the actual money that people can use, it won't affect the currency. 

IMO, a lot has to do with the culture... The way I see it, working hard also includes giving a lot, and that means buying bonds, so the government can spend the huge amounts of money they currently do to do whatever (education, health, etc.). The pension program is totally shot, but I get the impression that people just consider it as an additional tax (and some simply don't pay, of course). This keeps money out of consumer hands, so the government can spend more without risking inflation... Actually, I get the strong impression that the government prefers to borrow from individuals rather than banks, even though their quantitative easing mainly target banks. (Some say they announce quantitative easing measures just to spook away FX traders and temporarily lower the yen... Very rarely, they do send personal checks to everyone. Last year I got one of about $120, nothing to affect inflation though.) So banks keep piling up huge amounts of money, but they can't or won't lend it to anyone. For example, to get a personal loan, you probably won't find one for less than 10%..

Anyway, this is all very fragile. Anytime some banker or politician wish to screw it up, they could, like the way American banks seem to be doing for example. Politicians keep babbling about economic growth and deflation, but they just give up after a year or two. (There have been 15 prime ministers for the past 20 years, and the current one, Kan, seems like he's going to get kicked out before the end of the summer...) So, yeah, no body understands the real problems yet (peak oil for one... more than 80% of the energy comes from fossil fuels) or has noted any contradictions in their strategies (decreasing population => economic growth, huh??), but it's not like they haven't been trying to figure it out for the past 20 years..

All in all, looking forward to see how things will turn out on the other side of the oil curve... :)

Samuel

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