Posted on 11/16/2014 10:26:26 PM PST by zeestephen
Japan's economy is in technical recession after gross domestic product (GDP) shrank in the third quarter, defying expectations for growth and paving the way for Prime Minister Shinzo Abe to delay a second sales tax hike. The world's third-largest economy contracted an annualized 1.6 percent in the July-September quarter, data showed on Monday, compared with a Reuters forecast for a 2.1 percent gain.
(Excerpt) Read more at cnbc.com ...
And there it is... The increased consumption tax has put a damper on a lot of things. Supermarket prices are up significantly, nobody is buying televisions or new cars, staycations are up, and travel is likely to be local and inexpensive.
There is little appetite for another increase anytime soon.
The problem is demographics. For well over a decade now Japan’s birth rate has fallen down way below the replacement rate (about 2.1 births per woman). It is now down about 1.3.
Japan is suffering a demographic implosion the likes of which the world has never seen before. In some ways it was far worse than even in the worst wars and epidemics in human history. For example, the Black Death (1346-53) killed over 80 million people, almost half of the population of Europe. This is worse.
But that pandemic, as horrible as it was, had culled mainly the weak, the infirm, and the elderly. The strong survived. But the demographic implosion that was happening today in Japan is doing the opposite: culling out the young and the strong, leaving behind only the old and weak. A long-term GDP decline is inevitable. Although technology can mitigate some of effect by boosting productivity, I don’t believe that will be enough because the demographic decline is just too steep.
China is only one or two generations behind due to their one-child-policy.
Humans have seen it, but we don't recognize it for what it is. The Mayans suffered a complete collapse of their civilization, and lost 90% of their population over 200 years, with no clear reason why. I theorize that the reason is they just did not have enough children to support their society. Unlike people who believe in the falsified theories of Malthus, I don't feel that populations will always automatically increase.
You may be interested in the work of John B. Calhoun.
Promote having children!
Don't elect a pRESIDENT that views having a baby as punishment.
I guess the Japanese government hasn’t learned to lie about and manipulate the nation’s economic numbers yet.
I’m sure we have “experts” like Gruber who can school them on the fine art of smug lying.
Japan has a debt-to-GDP ration of over 227%. The IMF calls 125% unsustainable.
(Coincidentally, the US raced up to 126%, from 78%, under Obama. We're now #11 in the world, up there with economic troubled children Italy, Ireland, Greece, etc. Japan was 50.8% in 1980.)
Once interest rates rise, even just 2-3 points, Japan will simply be unable to pay their own debt payments. Servicing that debt already takes 17% of their budget, with interest rates at near-zero.
It’s not a recession until a Republican becomes president. Thought everyone knew that. Just like the homeless - we have no homeless in America, according to MSM, unless there is a Republican in residence at the WH.
They’re trying to use Karl Marx’s ideas to help the middle class and capitalism.
They should have actually read the Communist Manifesto before trying that...
The Japanese are often unimaginative in matters like these. Their expected growth was 2.1%. The actual growth was 1.6%.
All the Japanese need do is add a "seasonal adjustment" of 0.6% and they would actually beat expectations! Come on Japan, get with the program already.
they got burnt just like Icarus.
They don't rely on Obama's lies.
I’ll add that one to my list of Republican-caused disasters to AIDS, Katrina and Global Cooling, er, make that Warming, ah, make that Climate Change.
The only good thing working for Japan in this is that most of the debt is internally held. A haircut would hurt their own people but still leave their international trade and reputation intact.
I think the yen might crash to 1980 levels, but that might boost employment and exports. The standard of living might go down, but it still will be higher than most other places in the world. When I lived there in the early 80s, life was austere, but mostly comfortable and convenient.
The expert was a flaming Keynesian, and the two rather young and not especially sharp co-hosts let him ramble on at great length, without challenge, about the virtues of fiscal stimulus, currency devaluation, and the need to re-inflate the Japanese economy.
The BOJ inflation target is 2%, and the only question I wanted to hear him answer was what happens when Japanese interest rates go up 2%?
Slightly off topic...
By chance, the night before, I clicked on a video walking tour of two of Japan's most “affluent” neighborhoods.
Total shock - even though I already knew that the Japanese do not live as well as Americans.
The urban neighborhood was downright shabby, not even on the same planet with the upper east side in New York City.
The “affluent” suburban neighborhood was even more shocking. I've seen nicer homes and shops in middle class neighborhoods in Alabama.
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