Skip to comments.The Next Panic: Europe’s crisis will be followed by a more devastating one, beginning in Japan.
Posted on 09/22/2012 8:10:27 AM PDT by SeekAndFind
This summer, many government officials and private investors finally seemed to realize that the crisis in the euro zone was not some passing aberration, but rather a result of deep-seated political, economic, and financial problems that will take many years to resolve. The on-again, off-again euro turmoil has already proved immensely damaging to nearly all Europeans, and its negative impact is now being felt around the world. Most likely there is worse to comeand soon.
But the economic disasters of our timewhich involve big banks in rich countries, call into question the viability of government debt, and seriously threaten the reach of even the most self-confident nationswill not end with the euro debacle. The euro zone is well down the path to severe crisis, but other industrialized democracies are hot on its heels. Do not let the euro zones troubles distract you from the bigger picture: we are all in a mess.
Who could be next in line for a gut-wrenching loss of confidence in its growth prospects, its sovereign debt, and its banking system? Think about Japan.
Japans post-war economic miracle ended badly in the late 1980s, when the value of land and stocks spiked dramatically and then crashed. This boom-and-bust cycle left people, companies, and banks with debts that took many years to work off. Headline-growth rates slowed after 1990, leading some observers to speak of one or more lost decades.
But this isnt the full picture: after a post-war baby boom, population growth in Japan decelerated sharply; the number of working-age people has declined fairly rapidly since the mid-90s. Once you account for that, Japans economic performance looks much better.
(Excerpt) Read more at theatlantic.com ...
Fleeing the dollar for the euro or the yen or vice versa is like moving from Hiroshima to Nagasaki.The marriage of democracy to entitlement programs are a toxic mix.
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy”
Alexander Tyler, Scottish historian.
The problem with democracy is it gives rise to Democrats
RE: Fleeing the dollar for the euro or the yen or vice versa is like moving from Hiroshima to Nagasaki.The marriage of democracy to entitlement programs are a toxic mix.
So where is the safe haven? The Swiss have tied their currency to the Euro to avoid over appreciation...
I believe there are no safe havens any longer.
I am seeing an influx of new land buyers in my area where the sales are cash financed by cash-outs of retirement funds. Some are multi-generational family purchases. Some new buyers are self-described survivalists.
When we mentioned we will be putting our land on the market within 2 years, we have had one family and one individual ask us to notify them first.
Just anecdote, but obviously some folks consider dirt a safe haven.
“So where is the safe haven?”
Jim Sinclair of Mindset, a analyst I highly respect thinks the Swiss Franc or Canadian Dollar. The “Swissy” is not really “tied” to the Euro. It is based on the internals of Switzerland not the EU,. Canada surprisingly has low debt but will be impacted by the implosion of the US. I would also add the Aussie dollar and Singapore dollar to the list of decent currencies. Gold and silver are the only safe havens from the potential implosion of financial assets globally.
There are a lot of mutual funds and hedge funds who bill themselves as "Asia ex-Japan" -- in other words, investing in assets all over Asia with the exception of Japan. It seems like the international investment community has soured on Japan. And certainly Japan's star in consumer exports has waned. Two decades ago, Sony was the name to look for for electronic entertainment; but Korean firms have passed them. Japanese luxury cars were taking an increasing market share -- but it seems the pendulum has swung back to Germany.
Despite all that, the prevailing sentiment has been, it seems to me, that Japan has at least bottomed out, with Japanese stocks unlikely to begin tanking anew. It wasn't so much that hedge funds were worried about investment disasters in Japan -- it was just that things would be flat and uninteresting. Japan has demographics issues, with the population getting older, and the old people were "saving too much" -- as opposed to stimulating the economy. Investors were less likely to get burned, so the thinking went, than they were to get bored to death.
We may soon look at "boring" as a good thing, relatively speaking. As non-newsmaking as the Japanese economy has been (but for the earthquake, Japan would have all but vanished from the headlines), people tend to forget how big that economy is. Those who think that it has contracted as much as it ever will might want to take another look. Another leg down -- a big one -- is possible, if not probable. And the Atlantic article at the top of the thread sets out the structural impediments to a recovery.
"Those whom the gods would destroy, they first encourage to borrow cheaply."
China is starting to flex it's muscles in the region because they calculate that the United States cannot do anything to intervene. They are probably correct in that calculation. Expect to see an emergency re militarization of Japan as Japan realizes that The they can no longer rely on the US for their defense. And the only practical form of self defense capable of deterring a country like China that the Japanese could field in the short term are Nuclear weapons. Obama has achieved his goals of engineering the cutting of United States down to size and ushering in a Post American era in World Affairs. With recent current events we are beginning to see what a post American world looks like. In the Middle East and much of the rest of the Muslim world we see unrest riots, attacks on American and foreign Embassies and Islamic Fundamentalists working to intimidate the West to outlaw and criminalize "insults" to their religion and to further their goals of world wide Jihad. Wars that were won in Iraq and Afghanistan are now losing the peace due the policies of the last 4 years as the Taliban seeks to assert itself and prepare for it's return as NATO prepares to cut and run. Asia is becoming unstable as China sees economic problems on the horizon and begins to foment unrest and targets Japanese owned factories and Japanese civilians living in China while at the same time threatening Japan with war and inciting the Chinese people to go to war with Japan. These are the stirrings of where the Obama Post American foreign policy is leading us and Obama has made sure that the United States is weakened to the point where we are seriously constrained to halt situations spinning out of control.
Tea Party members, please pick up the white courtesy phone.
I expect Japan has all the components , sitting on the shelf, to facilitate a fast assembly of some number of nukes. (I'm not smarter than the Chinese...so, they probably realize this too)
“For the love of money is the root of all kinds of evil” is a famous biblical quote. In some modern countries, such as Japan and the US, one could say “Excessive credit is the root of all evil”, or perhaps “Real Estate is the root of all evil,” because those are the among the primary vehicles which led to our current indebted state.
Not just for Europe, Japan, or the US, but for the world. For decades, the welfare states of the First World have been subsidizing our unproductive residents, but the unproductive of the WORLD.
For decades, the West has been giving foreign aid and "loans" to Africa and other places. I'm talking hundreds of billions of dollars. Consider what happens when we discover we just can't do it any more, and people are told they must suddenly become productive if they want to be fed?
The Gods of the Copybook Headings
AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.
We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.
With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.
When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."
On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!
I’ve actually memorized that over the period of the last few months.
Kipling did an excellent job of predicting the next century ... from the vantage point of 1919.
“If you don’t work you die”.