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Japan has stagnated because its working age population is in decline. Apart from the demographics, Japan's doing great.

by tormeh 12y ago

adventured 12y ago
Japan is in dire condition in fact. They've stagnated because instead of generating real growth, they were faking continued prosperity by accumulating massive sums of debt. It was all meant to cover the fallout from the late '80s / early '90s asset bubble exploding. Debt servicing costs are roughly 23 trillion yen, compared to tax revenue of 45 to 47 trillion yen for 2014. So half their budget is now just going to paying interest on debt. That's a fiscal death spiral. Things are about to get a lot worse in Japan. It's already so bad they've taken to destroying the Yen to buy a very short amount of time, which is accelerating the overall erosion and rapidly dropping the standard of living. All of their projections for recovery have fallen flat (the failed Abenomics), as anybody with a basic understanding of non-Keynesian economics would have known ahead of time. Want to know what comes next? A more dramatic debasement of the Yen, as a means to stave off default a bit longer. It won't work, their debt situation will get worse, and the cost to service that debt will climb, sapping even more of their tax revenues; confidence in the Yen will fall, and their ability to prop up the debt situation by debasing the Yen will begin to weaken; sooner than later, they will no longer be able to maintain the facade.
- jvm 12y ago
  > Things are so bad they've taken to destroying the Yen to buy a very short amount of time, which is accelerating the overall erosion and rapidly dropping the standard of living in Japan This is an interesting perspective. If the falling yen is so bad for consumption, why is the yen anti-correlated with equity performance? Equity performance should be a measure of real expected national income. If a falling yen meant less income, equities should drop as well, just as inflationary shocks in the 1970s were met with sagging equity prices. Also the Nikkei is up roughly 50% from the time Abenomics was announced in late 2012. If you are correct that Abenomics will fail, you should be able to make a killing in the markets.

Japan has stagnated because its working age population is in decline. Apart from the demographics, Japan's doing great.

by tormeh 12y ago

Japan has stagnated because its working age population is in decline. Apart from the demographics, Japan's doing great.

Japan is in dire condition in fact. They've stagnated because instead of generating real growth, they were faking continued prosperity by accumulating massive sums of debt. It was all meant to cover the fallout from the late '80s / early '90s asset bubble exploding. Debt servicing costs are roughly 23 trillion yen, compared to tax revenue of 45 to 47 trillion yen for 2014. So half their budget is now just going to paying interest on debt. That's a fiscal death spiral. Things are about to get a lot worse in Japan. It's already so bad they've taken to destroying the Yen to buy a very short amount of time, which is accelerating the overall erosion and rapidly dropping the standard of living. All of their projections for recovery have fallen flat (the failed Abenomics), as anybody with a basic understanding of non-Keynesian economics would have known ahead of time. Want to know what comes next? A more dramatic debasement of the Yen, as a means to stave off default a bit longer. It won't work, their debt situation will get worse, and the cost to service that debt will climb, sapping even more of their tax revenues; confidence in the Yen will fall, and their ability to prop up the debt situation by debasing the Yen will begin to weaken; sooner than later, they will no longer be able to maintain the facade.

jvm 12y ago
> Things are so bad they've taken to destroying the Yen to buy a very short amount of time, which is accelerating the overall erosion and rapidly dropping the standard of living in Japan This is an interesting perspective. If the falling yen is so bad for consumption, why is the yen anti-correlated with equity performance? Equity performance should be a measure of real expected national income. If a falling yen meant less income, equities should drop as well, just as inflationary shocks in the 1970s were met with sagging equity prices. Also the Nikkei is up roughly 50% from the time Abenomics was announced in late 2012. If you are correct that Abenomics will fail, you should be able to make a killing in the markets.