11 ms·

Can anyone counter my impression that we are witnessing in the Western world the exact same course of events that happened in Japan in the 1990s? (low growth, h

Can anyone counter my impression that we are witnessing in the Western world the exact same course of events that happened in Japan in the 1990s? (low growth, high debt, ageing population, low interest rates, rising of average P/E ratios). Am I wrong to expect that corporate valuations in Europe and the U.S. will not appreciate in the coming decades as they have in past decades? Edit: Yes, the U.S. and Europe are indeed in different economic positions, the U.S. can still avoid the spiral if it continues to attract skilled immigration and remains a low bureaucracy, easy-to do business environment.

polskibus 6y ago
More importantly, has Japan ever recovered from such state?
- jonpurdy 6y ago
  I'm just a casual observer, but Japan had a "lost decade" post-bubble where average inflation and growth rates averaged 0%, but this has extended to a "lost two decades" now. (Side note: Japan's cost of living has also not increased with the rest of the world, which is why it's much more affordable to travel there these days than it was before.) One thing I don't understand (due to my own lack of knowledge) is related to real estate. Japan has been excellent by supplying enough medium and high density housing to keep housing prices relatively low and ensure individuals and families have access to that basic need. Presumably partially because of this (also because people generally don't want used houses), housing there isn't really considered an investment because the house is amortized over a 20-40 year period and demolished at the end of it. For those who know, how does this affect inflation and growth rates? (And feel free to correct anything I'm incorrect about.)
websites222 6y ago
Europe yes. US, no. The US is in an amazing position in terms of demography and growth. Aging population, but not immigrant averse like Japan and not an island. The US borders a rising economy with perfect demographics for growth (Mexico). The US is the least involved country in global trade. The US is increasingly disinterested in being the world police, so that capability can be deployed to protect economic interests abroad. We’re headed for global instability, but don’t expect the US to have a fate similar to Europe.
- GordonS 6y ago
  > not immigrant averse like Japan and not an island As the past 4 years have demonstrated, there is a very large segment of the US population is very much against immigration, and would happily turn the country into an "island" by building walls around the land borders.
  - websites222 6y ago
    The last four years can’t really be compared to the last 2000 of Japan’s. Immigration is already ingrained in American culture. The aging boomers will die and be replaced by the most ethnically diverse generation in American history.
    - tjs8rj 6y ago
      It's disingenuous to cast immigration concerns like an "aging boomer thing". The vast majority of Americans are fine with vetted, legal immigration. According to Pew, nearly 80% worry about illegal immigration "At least a little" to "A great deal". Furthermore there are real concerns, costs, and benefits to be weighed with immigration of all kind (legal and not), and dismissing them is just naive. To list a few different people find concerning: depressing wages of domestic population, rapid cultural change of domestic population, brain drain from foreign population, strain on tax / social systems, ineffective vetting allowing cross-border contraband and criminal activity, and so on. All of these are valid and deserve scrutiny and investigation. Obviously there are many beneficial aspects to immigration, and nearly all examples of very successful civilizations in history were at a crossroads of many cultures. Just wanted to make it clear that the immigration debate won't "die with boomers", and it shouldn't, because it is an important discussion to have.
  - frockington1 6y ago
    Compared to other nations, the US has the least restrictive immigration laws. The US also benefits by bordering Canada with some of the most restrictive immigration laws. If you want to go where there is growth, there's no other option
spacedcowboy 6y ago
Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ... So who knows ?
- JKCalhoun 6y ago
  That's more short-term with regard to OP's question.
- ovi256 6y ago
  That would necessitate higher interest rates to cool down a heated economy, not low / negative rates.
- onion2k 6y ago
  At the current rate of vaccinations, 1.5m a week, with people needing 2 shots (750,000 people a week), it'll take approximately a year to get to 90% of the adult population vaccinated with 2 shots: 50m adults * 0.9 / 750,000 = 60 weeks (I've knocked off 8 weeks because vaccinations have already started). The idea that people will be back out spending again in the summer is ... ambitious.
  - andrepd 6y ago
    You do not need 90% of the population vaccinated in order to live life again. As soon as you've protected the high-risk demographic and all that's left are the under 50s or under 40s for whom the CFR is 0.3% or 0.1%, you can pretty much go back to normal. The zero-risk mentality is silly.
    - mnw21cam 6y ago
      I disagree. If the R0 number is somewhere around 3 (and I think this is perhaps a rather conservative estimate), then you should expect the R number to approach near R0 again if we lift all the lockdown restrictions. If R is around 3 with nobody vaccinated, then the virus will grow if fewer than 2 in 3 people have antibodies (something like 90%+ of those who are vaccinated and an unknown proportion of those who have had the disease). If we declare the high risk demographic safe because they have all been vaccinated, and therefore we can go back to licking each others' eyeballs, then you would expect the entire population to become infected in a matter of a few months. 0.3% of the entire population is more people than have died in the UK so far from the virus. But more importantly, a much greater proportion of people will require medical help, and then survive, when infected. If you allow the virus to run rampant, then you will end up with the health service overwhelmed with people who need help. Those poor health service workers need a break. If we overwhelmed them, then we might discover just what proportion of infected people die without medical intervention. To stop the virus growing in the population, we need at least 2 in 3 people to have antibodies. In order for that to happen, we need to have about 75% of people vaccinated, in order to account for the small proportion of people who won't develop effective antibodies after vaccination. We can only lift all the restrictions once that has happened. That is the point at which the herd immunity prevents the virus from growing, and protects the unvaccinated.
moltar 6y ago
Japan was somewhat forced into the predicament. See the works of Richard Werner.

polskibus 6y ago

More importantly, has Japan ever recovered from such state?

jonpurdy 6y ago
I'm just a casual observer, but Japan had a "lost decade" post-bubble where average inflation and growth rates averaged 0%, but this has extended to a "lost two decades" now. (Side note: Japan's cost of living has also not increased with the rest of the world, which is why it's much more affordable to travel there these days than it was before.) One thing I don't understand (due to my own lack of knowledge) is related to real estate. Japan has been excellent by supplying enough medium and high density housing to keep housing prices relatively low and ensure individuals and families have access to that basic need. Presumably partially because of this (also because people generally don't want used houses), housing there isn't really considered an investment because the house is amortized over a 20-40 year period and demolished at the end of it. For those who know, how does this affect inflation and growth rates? (And feel free to correct anything I'm incorrect about.)

websites222 6y ago

Europe yes. US, no. The US is in an amazing position in terms of demography and growth. Aging population, but not immigrant averse like Japan and not an island. The US borders a rising economy with perfect demographics for growth (Mexico). The US is the least involved country in global trade. The US is increasingly disinterested in being the world police, so that capability can be deployed to protect economic interests abroad. We’re headed for global instability, but don’t expect the US to have a fate similar to Europe.

GordonS 6y ago
> not immigrant averse like Japan and not an island As the past 4 years have demonstrated, there is a very large segment of the US population is very much against immigration, and would happily turn the country into an "island" by building walls around the land borders.
- websites222 6y ago
  The last four years can’t really be compared to the last 2000 of Japan’s. Immigration is already ingrained in American culture. The aging boomers will die and be replaced by the most ethnically diverse generation in American history.
  - tjs8rj 6y ago
    It's disingenuous to cast immigration concerns like an "aging boomer thing". The vast majority of Americans are fine with vetted, legal immigration. According to Pew, nearly 80% worry about illegal immigration "At least a little" to "A great deal". Furthermore there are real concerns, costs, and benefits to be weighed with immigration of all kind (legal and not), and dismissing them is just naive. To list a few different people find concerning: depressing wages of domestic population, rapid cultural change of domestic population, brain drain from foreign population, strain on tax / social systems, ineffective vetting allowing cross-border contraband and criminal activity, and so on. All of these are valid and deserve scrutiny and investigation. Obviously there are many beneficial aspects to immigration, and nearly all examples of very successful civilizations in history were at a crossroads of many cultures. Just wanted to make it clear that the immigration debate won't "die with boomers", and it shouldn't, because it is an important discussion to have.
- frockington1 6y ago
  Compared to other nations, the US has the least restrictive immigration laws. The US also benefits by bordering Canada with some of the most restrictive immigration laws. If you want to go where there is growth, there's no other option

spacedcowboy 6y ago

Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ... So who knows ?

JKCalhoun 6y ago
That's more short-term with regard to OP's question.
ovi256 6y ago
That would necessitate higher interest rates to cool down a heated economy, not low / negative rates.
onion2k 6y ago
At the current rate of vaccinations, 1.5m a week, with people needing 2 shots (750,000 people a week), it'll take approximately a year to get to 90% of the adult population vaccinated with 2 shots: 50m adults * 0.9 / 750,000 = 60 weeks (I've knocked off 8 weeks because vaccinations have already started). The idea that people will be back out spending again in the summer is ... ambitious.
- andrepd 6y ago
  You do not need 90% of the population vaccinated in order to live life again. As soon as you've protected the high-risk demographic and all that's left are the under 50s or under 40s for whom the CFR is 0.3% or 0.1%, you can pretty much go back to normal. The zero-risk mentality is silly.
  - mnw21cam 6y ago
    I disagree. If the R0 number is somewhere around 3 (and I think this is perhaps a rather conservative estimate), then you should expect the R number to approach near R0 again if we lift all the lockdown restrictions. If R is around 3 with nobody vaccinated, then the virus will grow if fewer than 2 in 3 people have antibodies (something like 90%+ of those who are vaccinated and an unknown proportion of those who have had the disease). If we declare the high risk demographic safe because they have all been vaccinated, and therefore we can go back to licking each others' eyeballs, then you would expect the entire population to become infected in a matter of a few months. 0.3% of the entire population is more people than have died in the UK so far from the virus. But more importantly, a much greater proportion of people will require medical help, and then survive, when infected. If you allow the virus to run rampant, then you will end up with the health service overwhelmed with people who need help. Those poor health service workers need a break. If we overwhelmed them, then we might discover just what proportion of infected people die without medical intervention. To stop the virus growing in the population, we need at least 2 in 3 people to have antibodies. In order for that to happen, we need to have about 75% of people vaccinated, in order to account for the small proportion of people who won't develop effective antibodies after vaccination. We can only lift all the restrictions once that has happened. That is the point at which the herd immunity prevents the virus from growing, and protects the unvaccinated.

moltar 6y ago

Japan was somewhat forced into the predicament. See the works of Richard Werner.