Japanese Point of No Return
By Barry Ritholtz - February 24th, 2010, 9:00AM
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
February 24th, 2010 at 9:15 am
If Japan is such a basket case, why are 10-year JGBs at 1.5%?
February 24th, 2010 at 9:24 am
japan, the leader in corporate cronyism, and influencing government, we have grabbed the baton
February 24th, 2010 at 9:27 am
Venn Data:
Cause they have a printing press also!
February 24th, 2010 at 9:28 am
listen and learn the new frank lutz propaganda phrase, ” THE AMERICAN PEOPLE’, all repubs now use it all the time, it’s not our idea’s, what we want, what we think is best, the only etc.
it’s what The Amercian People believe and or want etc.
this is designed to cast a big net and influence thinking cause who is not in the group, it makes u question internally
February 24th, 2010 at 9:42 am
Sorry, I thought I posted the following in the right place. This appears to be where the action is:
I think we’re all going Japanese. These pictures all look like the US historically and/or as anyone with a little common sense can project for the future.
The only omission is the expected higher cost of anything that can be commoditized and traded like oil. Iron ore is the new poster child fof greed and incompetent regulation. It is the most abundant element on earth excepting nitrogen or hydrogen, but financial cartels are piling in to create an effective middleman structure, just like the one controlling the price of oil today. OPEC is not the cartel in charge today for oil. The financial cartels that trade paper on exchanges using financial innovation all combine to act as effective middlemen while adding no value to the end consumer. Incompetent regulation can be thanked for this.
Thus, Japan and the US and probably the EU can expect a lowered standard of living for decades due to both their own debt financed excesses AND the financial cartels that control commodity pricing.
February 24th, 2010 at 9:47 am
Barry Ritholtz Says:
February 24th, 2010 at 9:27 am
Venn Data:
Cause they have a printing press also!
comment:
——————–
No, the printing press should have the opposite effect, according to text books. A lack of velocity that offsets the printing press output causes lower rates. This is a symptom of the balance sheet recession. Nobody wants to borrow, thus no credit, thus no velocity, thus a liquidity trap.
February 24th, 2010 at 10:00 am
The middle class has become indebted beyond redemption, has no prospects for future income security or growth, has not been included — as an integral element of the cycle — in any attempts to save the system, and thus, there is no velocity. Liquidity can be established with a keystroke — it is where and to whom that liquidity is applied that determines success or failure. Nothing flourishes when its roots have been destroyed.
February 24th, 2010 at 10:00 am
There is nothing in Katsenelson’s analysis that I haven’t seen a dozen other places.
The agenda-setter in analyzing Japan’s situation is Richard Koo. He shows that high savings in Japan explain the low interest rates.
And please pay attention, Messrs Katsenelson and Ritholz- corporations can save too! There is a corporate sector and you can’t just ignore it. It’s too bad that Katsenelson does so; it would save him having to look stupid and ask, “duh, why are interest rates so low?”
As for Ritholz’s rejoinder that the Japanese have kept interest rates low through the use of the printing press, I submit Barry Ritholz for the 2011 Viktor Geraschenko Prize for Excellence in Central Bank Management.
February 24th, 2010 at 10:11 am
“Point of No Return”
Will be playing in a country near you…soon.
February 24th, 2010 at 10:20 am
Funny how Vitaly is warning of false axioms and at the same time using them for most of his analysis, e.g.:
“However, corporations are much more robust than Japanese, unlike Japanese, they are not managed to maximize employment but for the interest of shareholders.”
I’d rather think that the companies squeezed out for the shareholders are the first to go down in the coming downturn, while companies that built some backups have a much better chance to weather it.
February 24th, 2010 at 11:01 am
“However, corporations are much more robust than Japanese, unlike Japanese, they are not managed to maximize employment but for the interest of shareholders.”
However, the only positive employment in the last ten years can be found in Government jobs, hardly a robust sign for society.
With a working population living on credit and getting poorer by the minute, maximizing shareholders gains is not an answer either, I’ll take modernizing and planning for the future over a quick gain anytime as well as salaried people being rewarded over shareholders recreating some wealth in the 90 or so percent of the population.
One point also about those robust corporations, now efficiently running the country in the ditch, and thanks to the Supreme Court the entire political process; government over-spending can be found in many places, mostly for corporate interests and their great shareholders. Such is the case for Healthcare and Defense spending (many others probably), so Mr Katsenelson, we are dangerously approaching the point of no return also.
February 24th, 2010 at 3:22 pm
But this article from yesterday’s FT seems to downplay the threat:
http://www.ft.com/cms/s/3/6d61c53a-1fc2-11df-8975-00144feab49a.html
Steve
February 26th, 2010 at 6:53 pm
This analysis seems a bit off. Debt to GDP in Japan is closing in on 200%. In the US, it’s years before we hit 100%. And we’re a reserve currency.
So who can tell me exactly when rates start to go up because of debt levels? Is it 90%? 110%?
Regardless, in the near term, we should stimulate the economy, and deal with entitlement reform. What other approach would make any sense at all?