Posted on 12/01/2009 9:57:00 PM PST by george76
Many economists draw comparisons between the United States now and Japan in 1990.
For those who aren't familiar with Japan's recent economic history, this is not a good thing.
Japan's stock market peaked in 1989 at about 40,000. It now trades around a quarter of that level, or 10,000. GDP, meanwhile, has barely grown at all.
Economists used to refer to Japan's malaise as "a lost decade." Now they're saying "lost decades."
Our guest Howard Davidowitz sees a similarly horrific future in store for the U.S. He calls America's current path, rich in deficit spending and weak in currency a "road to nowhere."
(Excerpt) Read more at businessinsider.com ...
This was fantastic!
I still believe we’re closer to Brabant Antwerp after the mobs of French Revolutionaries sacked the city-state.
Antwerp never recovered. Rapid decline took 16 years of French revolutionaries’ occupation. The entire entrepreneurial class fled, never to return except to resell goods at retail to the dwindling remaining population.
Our own NASDAQ died in Y2K at the 4700 level. Nine years later it’s less than half that. You would have been a lot better off investing in CDs than NASDAQ.
Howard is simply great. IN DA TANNNNKKKK!!!
politicians in Japan and in America are responsible. Neither want to take the hit. So they desperately find any stupid way out that they can, and call shite gold.
We need a cessation of corporate tax, death ta and capital gains, ,to ramp up the US economy.. Obama and his shite heads are going in a diametrically opposed directions, a bunch of whining shiteheads to their proverbial slaughter.
What a bunch of dumb a$$es.America knows now. The socialists are all in a rush to get their population control legislation through so they can soak us of all of our savings and retirement, when monetizing the national debt fails , as it will. That is their plan “B”.
I predict that these idiots will be turned out in the next election cycle, in both parties. We want Reaganomics back, and we want the greediest bunch of all gone , the politicians in Washinigton, those who do not want to reduce the size of government and cut our taxes completely.
The problem, as I see it, and I’m not talking about the out of control money printing....is the process by which there will dawn in the recognition of basically every person with functioning neurons what is to come. There won’t be much that the late-awakeners will be able to do, in fact, there is little that the early suspectors can or will be able to do.
Imagine you are on the Titanic, and I only use that example because people are familiar with it, and I don’t mean to be overly dramatic...even though the outcome *WILL* be dramatic; albeit...slow-motion dramatic.
You’re sailing along. Nobody imagines anything can go wrong, all is copacetic. At time “0”, the ship hits the iceberg, two junior officers on the bridge hear the crunch, assess the damage, and gradually realize the ship is going to sink.
15 and 30 minutes later, all the officers know.
1 hour later, 8% of the passengers know.
(and I am obviously just making up these numbers)
2 hours later, 20% of the passengers know.
By the time the lifeboats are cranked out, 80+% of the passengers know.
At every stage of increased awareness, there is an increased panic level until the hull is pointing up out of the water at an angle. Still, a very large proportion of psgrs cannot even imagine this could be happening, even as they see it with their own eyes.
I wonder what life will be like then. I am not optimistic that 10% of the 50% who voted 0bama in and thought their “ship” had come in will not go completely animal.
Calls for a new tagline.
I like you new tagline. Prescient.
I question an end to the corporate tax across the board. I would not want to provide additional incentives to the big Wall Street financiers who record profits through financial manipulation and not investment. I would also not want to encourage corporations to increase profits by outsourcing more jobs overseas.
Instead, I favor adjusting the corporate tax system to encourage investment in US manufacturing. A resurgence in US manufacturing will create the private sector jobs the country so desperately needs. This could be accomplished by cutting the federal tax rate to zero on profits generated from manufacturing in the United States. This action will immediately cause companies to reassess decisions in process to outsource more production overseas, while at the same time dramatically shift the economics of producing new products in the US instead of overseas. The new economics will encourage entrepreneurs to start up new manufacturing enterprises across the country.
A second change in the tax code will encourage investment in US companies. End double taxation of dividends paid by US companies to US citizens by changing the current 15% personal tax rate on dividends to zero. To encourage investment in US operations the zero tax rate on dividends would be allowed only on dividends paid by corporations deriving over 50% of profits within the United States. Over time, this shift would encourage companies to invest in expanding US operations and paying a percentage of profits to shareholders. Paying cash dividends to shareholders is a much more efficient way to return excess capital to shareholders than stock buybacks which are diluted due to high fees paid to investment bankers.
To end the slide to socialism we must encourage innovation, business creation, and job growth in the domestic economy. What better way to encourage the investment in job creating enterprises than to reward those who make the capital investments in job creating US manufacturing? Today’s tax and trade policies reward financial speculators and those who move investment out of the US to other countries.
The bottom line is that the cost of certain businesses and manufacturing - even including shipping and other inconvenieces like language, time zones, etc. - is higher in the US than overseas. Period. When the price of labor and government mandates total more than the other guy’s, the laws of economics will kick in.
Now, governments may try to thwart those laws, but time eventually takes its toll on the jiggerers. Making additional patches like tax incentives only forestalls the eventual castor oil, the pain, the the day of reckoning. Doing so exacerbates the problem and makes the eventual solution even more drastic.
No. They are only good at breaking windows and making whining noises, safe in the idea that they will only face misdemeanor charges.
Al of the frustration, pent up rage, and potential violence is on the side of an increasingly angry middle class.
All of the work, striving, saving,they have done is being stolen by polticians to buy votes from leeches on the body politic.
On the day that breaks loose (and it will) you are going to see some serious s**t come down.
Howard’s videos are good.
Most liberals will never get it. They will ride the ship into the ocean bottom still in denial.
What Recovery? U.S. Consumers Getting “Dramatically Worse,” Howard Davidowitz .
Only on FR would you find such an analogy. Love it.
Thanks for the ping, George. That video is going to everyone I know.
bttt for later
He has a savagely good point. The most important parallels between the Japanese situation and the US situation:
1. The BOJ did QE - at the advice of people from our Federal Reserve (Greenspan).
2. They ran HUGE deficits, and in the process went from one of the world’s largest creditor countries to one of the world’s largest debtor nations. Japan’s national debt is now unsustainable, both for fiscal as well as demographic reasons.
3. The money went into the Japanese banks, which should have been broken up. There, like here, huge amounts of money were poured into the banks to keep them solvent - with no accountability, no change in structure, nothing. And as a result, the bailout money ran down ratholes.
4. The bailouts helped spawn the US bubble by means of the Yen carry trade. The Fed’s ZIRP is even now blowing up an equity bubble, and the price premium of US Treasury debt is unsustainable in the face of the unrelenting supply.
In Japan, just as here in the US now, the central bank warped the yield curve to create a situation of absurd profit for the banks (ie, a zero short term rate, so ergo, the yield curve is by definition “steep” because the long term rates never go to zero). The idea was then (as we’re doing now) that they’d relax the accounting standards to allow the bankers to carry around dubious loans and use profits from the manipulated yield curve to underwrite losses on bad debt.
The problem with this idea, then as now, was that the analysts and wonk types seriously underestimated the amount of bad debt that the banks had. It took more than a decade for the bad debt to finish coming to the surface, and in the meantime, people lost confidence in both the bankers and the political leaders, which led up to the election we saw in August of this year.
There’s only so many lies, obfuscations and only so much thimblerigging that the public will stand out of bankers. The patience in Japan was probably more prolonged than the patience here will be, owing to cultural differences.
A longer article on Japan’s ZIRP and QE...
http://www.freerepublic.com/focus/f-news/2398570/posts
Had been wanting to post something from Eiko Shinotsuka as she was one of the few voices of reason that argued against Japan’s failed ZIRP policies over the course of her career at the BoJ.
Nice nuanced approach you have there. But of course you think that we have time for a precision surgicalized economically nuanced recovery?
We are far beyond that brink,and we need to have a wholesale jump start of our economy. Not wart removal.
I am amazed about all this pap about transparency. We have perfectly good regulatory rules and laws now. I ask you, WHY ARE THEY NOT ENFORCED? More rules won’t get it done, more bureaucracy won’t either.Its the same with immigration law, those laws are NOT enforced.WHY?
We need politics OUT of regulation, which translated to Fannie and Freddie pushing sub prime mortgage applications
with banks so hard that applicants were not required to submit an income tax return.That was a political problem.
And they are STILL doing it. The political problem still exists.
Now many try to fix a political malaise with “transparency?”
What a laugh.
We need fed political and fed bureaucrat heads rolling, not transparency, which at best will simply constitute one more propaganda portal for the socialist mob.
Instead, I favor adjusting the corporate tax system to encourage investment in US manufacturing. A resurgence in US manufacturing will create the private sector jobs the country so desperately needs. This could be accomplished by cutting the federal tax rate to zero on profits generated from manufacturing in the United States. This action will immediately cause companies to reassess decisions in process to outsource more production overseas, while at the same time dramatically shift the economics of producing new products in the US instead of overseas. The new economics will encourage entrepreneurs to start up new manufacturing enterprises across the country.Sounds to me like your proposal would mainly create jobs for the bureaucrats and tax accountants and lawyers and regulators that would be required to identify which dividends qualified for your special rates, and what constitutes "manufactured in the United States", etc. Trying to manipulate the tax code to get companies to do the "right" kind of investing is the same sort of socialistic thinking that has caused much of the problems. Simplifying, rather than further complicating, the tax code is what is needed.A second change in the tax code will encourage investment in US companies. End double taxation of dividends paid by US companies to US citizens by changing the current 15% personal tax rate on dividends to zero. To encourage investment in US operations the zero tax rate on dividends would be allowed only on dividends paid by corporations deriving over 50% of profits within the United States. Over time, this shift would encourage companies to invest in expanding US operations and paying a percentage of profits to shareholders. Paying cash dividends to shareholders is a much more efficient way to return excess capital to shareholders than stock buybacks which are diluted due to high fees paid to investment bankers.
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