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On September 16 2014 08:11 AutoEngineer wrote:Show nested quote +On September 16 2014 00:01 oBlade wrote:On September 15 2014 23:29 AutoEngineer wrote:
Countries like South Korea, Taiwan, Germany and many other European nations are facing the same problem. I guess South Korea has some sort of back up since it has North Korea which has a relatively high fertility rate and a higher proportion of young people. This was said in jest, right? No, I wasn't joking at all. If you've read the media in the past 12 months, there is a lot of talk about South Korea's plans to reunify and the economic strategies they are currently investigating when a sudden collapse happens in North Korea. The exact time of reunification is not certain, however it's very clear that when South and North Korea reunify, this will boost the young population, increase fertility rates and Korea's economy may overtake France, Germany and Japan by 2045. http://www.reuters.com/article/2009/09/21/us-korea-north-united-idUSTRE58K0OA20090921Korea has HUGE potential to overtake Japan. Japan is the most aged country in the world. You don't know much impact this is having on their economy. Korea is facing a demographic crisis as well. But North Korea will give Korea much needed man power, young population and natural resources (worth $6 trillion USD according to one report). Germany is doing far better than Japan because it has lower public debt, it is a bigger exporter than Japan, it doesn't have to import a lot of energy, and their demographics are in better shape. Show nested quote +On September 16 2014 06:37 F1rstAssau1t wrote:
All i know is that Japan is a lot like Germany, no matter what happends they always rise.
Germany's economy is doing far better than Japan's.
It's not quite as easy of an equation (North+South=Korea^2) as you make it sound but it's nice to be optimistic about it.
As many of the biggest Japanese companies in the electronics sector are failing it's a valid fear that there's not much that can take these companies place over. Tangentially related, can someone quickly tell me how currently Sony's faring? Last I read about them was cca. half a year ago and their situation was very dire. Thanks in advance
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On September 16 2014 08:22 PVJ wrote:Show nested quote +On September 16 2014 08:11 AutoEngineer wrote:On September 16 2014 00:01 oBlade wrote:On September 15 2014 23:29 AutoEngineer wrote:
Countries like South Korea, Taiwan, Germany and many other European nations are facing the same problem. I guess South Korea has some sort of back up since it has North Korea which has a relatively high fertility rate and a higher proportion of young people. This was said in jest, right? No, I wasn't joking at all. If you've read the media in the past 12 months, there is a lot of talk about South Korea's plans to reunify and the economic strategies they are currently investigating when a sudden collapse happens in North Korea. The exact time of reunification is not certain, however it's very clear that when South and North Korea reunify, this will boost the young population, increase fertility rates and Korea's economy may overtake France, Germany and Japan by 2045. United Korea economy could pass Japan: Goldman Sachs http://www.reuters.com/article/2009/09/21/us-korea-north-united-idUSTRE58K0OA20090921Korea has HUGE potential to overtake Japan. Japan is the most aged country in the world. You don't know much impact this is having on their economy. Korea is facing a demographic crisis as well. But North Korea will give Korea much needed man power, young population and natural resources (worth $6 trillion USD according to one report). Germany is doing far better than Japan because it has lower public debt, it is a bigger exporter than Japan, it doesn't have to import a lot of energy, and their demographics are in better shape. On September 16 2014 06:37 F1rstAssau1t wrote:
All i know is that Japan is a lot like Germany, no matter what happends they always rise.
Germany's economy is doing far better than Japan's. It's not quite as easy of an equation (North+South=Korea^2) as you make it sound but it's nice to be optimistic about it. As many of the biggest Japanese companies in the electronics sector are failing it's a valid fear that there's not much that can take these companies place over. Tangentially related, can someone quickly tell me how currently Sony's faring? Last I read about them was cca. half a year ago and their situation was very dire. Thanks in advance
Sony is neither faring well or poorly compared to 2 years ago. It's still a tiny company compared to Apple and Samsung though. Their TV market share is now at a record low and their smartphones are doing poorly. The only saving factor for Sony is their entertainment division.
And I may be optimistic about Korean reunification but North Korea really is a demographic savior for the Korean peninsula. Fertility rate in North Korea is about 2 births per woman which is by far the highest in East Asia.
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Japan is a special case.
No one quite know how to read and know what's going to happen because we haven't seen something like this before.
But I am also wary of their economy, their policies kinda worked, until their more recent gamble to boost their spending, it has costed a lot without enough return imo
The lack of domestic consumption has so many structural causes to it and they have failed to even tackled one of them.
The study of reunification is about what if nk collapsed, sk has very little interest in reunification.
The amount of resources will be needed and the amount of pressure it will place upon the society and public service are too high for them to actively seek reunification.
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On September 16 2014 06:19 FiWiFaKi wrote:Show nested quote +On September 16 2014 06:00 GettingIt wrote:
If the issue is Japanese aren't consuming and leaving so much wealth in saving then can't this be resolved by having the central bank raise interest rates so people will be less inclined to keep their money in savings? Because you can't raise, simply put. Inflation rate is 0 in Japan, which means real interest rate = nominal interest rate... If Japan makes their nominal interest rate high, they are making their real interest rate really high, all that will cause is bring foreigners to invest money in Japan, and deplete all of Japan's reserves. A similar situation occurred in Australia not too long ago. Artificially changing the interest rate is extremely taxing resource wise for the government, and according to Chicago thought, it should never be done. There is monetary policy, and there is fiscal policy... One deals with money supply, one deals with government spending, that's what we get to control. Simply put, when you are told you'll get a 1% interest rate in Japan, it's not very tempting to invest, and setting it high will bring foreign investors to make money, but doing nothing for Japan. But when in a western country the inflation is 3%, and you are offered 4% interest rate, it feels a lot more tempting, even though the real interest rate is effectively the same 1%. As we know, change in inflation is proportional to change in money supply, and I believe that printing money would help their economy by generating manageable inflation, but the authorities in Japan are opposed to this notion for complex reasons, as they exercise a different economics theory. I think the Japan government is very fragmented, and it's a root of many of it's economic problems, but there are arguments for why you would like to keep money supply constant, so of which are explained here: http://www.economicshelp.org/blog/634/economics/the-problem-with-printing-money/edit: Oh, another thing to mention, printing money is not a simple solution as it seems, as currently Japan is in a Liquidity Trap, and by definition monetary policy does not work. So a very expansive monetary policy is needed, but that creates the great risk of hyper inflation.
I've decided to latch onto you as the resident expert because you lack the blatant contradictions of some members of this thread and talk like you know what's up.
http://www.tradingeconomics.com/japan/consumer-spending
I'm looking at the consumer spending chart here and trying to figure out what's up. It looks like consumer spending was rising steadily for a while until this recent insane cliff. I don't understand what's going on here. Some people are saying consumer spending is going down, but it seemed to be going up in recent years until this sudden change. Are drops like this normal? Was there a catastrophe this Spring that I wasn't aware of? Is the graph actually just of spending since June, and I've been reading it wrong? I want to inform myself about this, but details like this aren't making it easy.
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Cayman Islands24199 Posts
this program started out with an ambitious goal of introducing inflation through fiscal and monetary stimulus. but apparently they thought raising consumption tax would be a good idea. the tax raise is blatantly contradictory to the original aim of introducing inflation to fight long term balance sheet debt. i'm not sure why they did this but it is puzzling.
insular japan's demographics problem is nothing new and isn't really a part of abe economics. it's going to exacerbate the probelm of domestic consumption and industry flight though.
in some perfect world the political leadership probably wanted to raise demand via fiscal stimulus, upward wage through increased exports thus company hiring via devaluation of yen and monetary stimulus. but the tax raise has fucked the demand branch quite a bit and it turns out japanese companies are not so in abe's corner with regards to wage raise and hirings. one could say they should have relaxed labor market regulations and so on first, in order to prevent companies from taking their ball and going (away from) home.
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On September 15 2014 23:29 AutoEngineer wrote:
The last time Japan raised its consumption tax, it caused a recession.
Are you sure about this? I think they went to 8% in June this year and there was no mention of a recession?
wow
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On September 16 2014 08:11 AutoEngineer wrote:Show nested quote +On September 16 2014 01:29 coverpunch wrote:
Are you trying to rally the "StarCraft is dead" crowd to a new cause? Rumors about Japan's demise have been overblown for a very long time now. It's not to say they don't have problems, but the economy is not in "free fall".
It's hilarious how the OP juxtaposes bad GDP news as proof with "GDP numbers are all fake anyways". And do you have a source showing how quality of life in Japan is going down? Perhaps read this article: http://www.economist.com/news/finance-and-economics/21617031-harmful-tax-hike-and-reticent-employers-take-their-toll-slings-and-arrowsShow nested quote +Slings and arrows
IT IS crisis mode in the Kantei, the office of Shinzo Abe, Japan’s prime minister. A succession of awful data has pummelled his economic programme, which consists of three “arrows”: a radical monetary easing, a big fiscal stimulus and a series of structural reforms. On September 8th revised figures showed that GDP shrank by 1.8% in the second quarter, or by 7.1% on an annualised basis, even worse than the initial estimate of 1.7%. Maybe not in "freefall" but still in crisis mode, give or take. I'm sure you realized that I didn't mean that Japan's economy is going to collapse any second.
It is in "crisis mode" in much the same way that the Fed, BOE, and ECB are in crisis mode. It isn't the fear of a sudden collapse that scares everyone but the worry that this news is bad and the solutions aren't working out the way the models said they would. Which might mean the problems are glacial and not reparable by fiscal or monetary policy, and these countries might be stuck with low-growth demographic problems for a long time.
So I can believe the Japanese government is very worried and they should be because the economic outlook is not improving and might indeed be worsening, but I think it is an exaggeration to write as though they're in the war bunker bracing for the worst. You can say that's not what you were trying to say but that is the image your words create.
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The lack of qualification to talk about this really makes it hard for me to take anything said here credibly, its just people talking with little to no socratic ignorance in the thread.
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On September 16 2014 08:11 AutoEngineer wrote:
Korea is facing a demographic crisis as well. But North Korea will give Korea much needed man power, young population and natural resources (worth $6 trillion USD according to one report).
1. North Korea's demographic picture is only marginally better South Koreas. The only reason it doesnt have as many very old people, ie 60+, as South Korea is that life expectancy in North Korea doesnt allow for it. http://www.indexmundi.com/factbook/compare/north-korea.south-korea/demographics
2. That population right now is literally 16x poorer than South Koreans, who is going to pay to equvalize that? Or do you genuinely think South Koreans are going to tolerate having their standard of life decline by over 50%? No they will not.
Germany still hasnt finished digesting East Germany, and East Germany was a fraction of the Federal Republic's population.
3. North Korea's military will have to be disarmed and recycled, and you will have large population of long lost males who have no uses.
Unless of course you are taking about where the South just rules the North like a complete colony, keeping the Norther separate from the Southern economy.
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On September 16 2014 09:07 Acritter wrote:Show nested quote +On September 16 2014 06:19 FiWiFaKi wrote:On September 16 2014 06:00 GettingIt wrote:
If the issue is Japanese aren't consuming and leaving so much wealth in saving then can't this be resolved by having the central bank raise interest rates so people will be less inclined to keep their money in savings? Because you can't raise, simply put. Inflation rate is 0 in Japan, which means real interest rate = nominal interest rate... If Japan makes their nominal interest rate high, they are making their real interest rate really high, all that will cause is bring foreigners to invest money in Japan, and deplete all of Japan's reserves. A similar situation occurred in Australia not too long ago. Artificially changing the interest rate is extremely taxing resource wise for the government, and according to Chicago thought, it should never be done. There is monetary policy, and there is fiscal policy... One deals with money supply, one deals with government spending, that's what we get to control. Simply put, when you are told you'll get a 1% interest rate in Japan, it's not very tempting to invest, and setting it high will bring foreign investors to make money, but doing nothing for Japan. But when in a western country the inflation is 3%, and you are offered 4% interest rate, it feels a lot more tempting, even though the real interest rate is effectively the same 1%. As we know, change in inflation is proportional to change in money supply, and I believe that printing money would help their economy by generating manageable inflation, but the authorities in Japan are opposed to this notion for complex reasons, as they exercise a different economics theory. I think the Japan government is very fragmented, and it's a root of many of it's economic problems, but there are arguments for why you would like to keep money supply constant, so of which are explained here: http://www.economicshelp.org/blog/634/economics/the-problem-with-printing-money/edit: Oh, another thing to mention, printing money is not a simple solution as it seems, as currently Japan is in a Liquidity Trap, and by definition monetary policy does not work. So a very expansive monetary policy is needed, but that creates the great risk of hyper inflation. I've decided to latch onto you as the resident expert because you lack the blatant contradictions of some members of this thread and talk like you know what's up. http://www.tradingeconomics.com/japan/consumer-spendingI'm looking at the consumer spending chart here and trying to figure out what's up. It looks like consumer spending was rising steadily for a while until this recent insane cliff. I don't understand what's going on here. Some people are saying consumer spending is going down, but it seemed to be going up in recent years until this sudden change. Are drops like this normal? Was there a catastrophe this Spring that I wasn't aware of? Is the graph actually just of spending since June, and I've been reading it wrong? I want to inform myself about this, but details like this aren't making it easy.
It's not an insane cliff, it's important to be looking at the scale of the graph, and we can see the spending is what it was 30 months ago, so it's not a depression like event. I would look at the 322,000 point as an anomaly, and rather consider looking at the previous period spending. That would relate to a drop from 315,000 to 305,000, which just doing in my head is 3.2-3.3% decrease.
A 3% decrease in consumer spending would align very well with the 5% to 8% consumption tax increase. Upon a little research, that's exactly what the economic analysts say also, and they state that the expected increase in taxes made people purchase more in the previous quarter (to save on the tax), which follows the exact trend you see. I feel quite comfortable stating that is the overwhelming factor.
http://en.wikipedia.org/wiki/Taxation_in_Japan
http://www.dw.de/abenomics-gains-distorted-by-consumption-tax-say-analysts/a-17911039
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On September 16 2014 08:34 AutoEngineer wrote:Show nested quote +On September 16 2014 08:22 PVJ wrote:On September 16 2014 08:11 AutoEngineer wrote:On September 16 2014 00:01 oBlade wrote:On September 15 2014 23:29 AutoEngineer wrote:
Countries like South Korea, Taiwan, Germany and many other European nations are facing the same problem. I guess South Korea has some sort of back up since it has North Korea which has a relatively high fertility rate and a higher proportion of young people. This was said in jest, right? No, I wasn't joking at all. If you've read the media in the past 12 months, there is a lot of talk about South Korea's plans to reunify and the economic strategies they are currently investigating when a sudden collapse happens in North Korea. The exact time of reunification is not certain, however it's very clear that when South and North Korea reunify, this will boost the young population, increase fertility rates and Korea's economy may overtake France, Germany and Japan by 2045. United Korea economy could pass Japan: Goldman Sachs http://www.reuters.com/article/2009/09/21/us-korea-north-united-idUSTRE58K0OA20090921Korea has HUGE potential to overtake Japan. Japan is the most aged country in the world. You don't know much impact this is having on their economy. Korea is facing a demographic crisis as well. But North Korea will give Korea much needed man power, young population and natural resources (worth $6 trillion USD according to one report). Germany is doing far better than Japan because it has lower public debt, it is a bigger exporter than Japan, it doesn't have to import a lot of energy, and their demographics are in better shape. On September 16 2014 06:37 F1rstAssau1t wrote:
All i know is that Japan is a lot like Germany, no matter what happends they always rise.
Germany's economy is doing far better than Japan's. It's not quite as easy of an equation (North+South=Korea^2) as you make it sound but it's nice to be optimistic about it. As many of the biggest Japanese companies in the electronics sector are failing it's a valid fear that there's not much that can take these companies place over. Tangentially related, can someone quickly tell me how currently Sony's faring? Last I read about them was cca. half a year ago and their situation was very dire. Thanks in advance Sony is neither faring well or poorly compared to 2 years ago. It's still a tiny company compared to Apple and Samsung though. Their TV market share is now at a record low and their smartphones are doing poorly. The only saving factor for Sony is their entertainment division. And I may be optimistic about Korean reunification but North Korea really is a demographic savior for the Korean peninsula. Fertility rate in North Korea is about 2 births per woman which is by far the highest in East Asia.
How much of that is due to the current sociopolitical situation there though and how might it change if there was reunification? Sure maybe their demographics are solid for a while but if cultural trends from the South creep into the North (or if there was pressure by the N government to have more kids disappears) would that really only be a temporary fix?
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So does this mean I'll get a good deal on a house if I move to Japan?
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Hong Kong9179 Posts
dont even think you'd find a house even if you wanted
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I'm actually really confused why Japan would hike their consumption tax so much. It seems to fly in the face of their goals over the past 3 years.
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Japan has historically excelled at the Giant Public Works project and have a Giant Public Debt to match their Giant Private Savings.
Perhaps, Japan might have found something better to do with their money. A host of alternatives like M&A foreign companies, buying up foreign re-estate, other capital expenditures at home, or even slow deflation and steady appreciation of the yen would have signaled capital reallocation and retooling to target the home market rather than export markets.
This most recent episode of fiscal spending has curiously been hedge with a consumption tax as if Japanese government was afraid of getting into even more debt. If you're going to worried about that, why even bother with the stimulus? The whole point of stimulus is fiscal irresponsibility. Mortgage the future to make the present look better. If you are going to raise taxes, then it's simply taxing and spending, and do you really think the Japanese government is making better spending decisions than private individuals?
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On September 16 2014 12:17 Sub40APM wrote:Show nested quote +On September 16 2014 08:11 AutoEngineer wrote:
Korea is facing a demographic crisis as well. But North Korea will give Korea much needed man power, young population and natural resources (worth $6 trillion USD according to one report).
1. North Korea's demographic picture is only marginally better South Koreas. The only reason it doesnt have as many very old people, ie 60+, as South Korea is that life expectancy in North Korea doesnt allow for it. http://www.indexmundi.com/factbook/compare/north-korea.south-korea/demographics2. That population right now is literally 16x poorer than South Koreans, who is going to pay to equvalize that? Or do you genuinely think South Koreans are going to tolerate having their standard of life decline by over 50%? No they will not. Germany still hasnt finished digesting East Germany, and East Germany was a fraction of the Federal Republic's population. 3. North Korea's military will have to be disarmed and recycled, and you will have large population of long lost males who have no uses. Unless of course you are taking about where the South just rules the North like a complete colony, keeping the Norther separate from the Southern economy.
The idea of North Korea as a demographic saviour is laughable. Even assuming it is full of fertile young people, most of them are completely useless as labour in a market economy since most of them would have worked in the army or in farms for all their lives and have little applicable skills.
In fact the influx of a huge low skilled and poor population sounda like a demographic disaster in the making. It will create a hugely divided society.
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You know, what really gets me is why there was no uprising in North Korea after the fall of the Soviet Union while other cult like nations like Albania and Romania fell.
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On September 16 2014 12:30 NotSorry wrote:
So does this mean I'll get a good deal on a house if I move to Japan?
Same as anywhere else - if you're willing to live out in the boonies, then yes, you can find bigger houses at low cost. If you need to live near central Tokyo, then you will struggle to find any bargains.
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we had western help in falling.
maybe they couldn't reach as far as NKorea.
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On September 16 2014 17:02 Shiragaku wrote:
You know, what really gets me is why there was no uprising in North Korea after the fall of the Soviet Union while other cult like nations like Albania and Romania fell.
This isn't surprising as North Korea is basically an authoritarian government with an army first principle.
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EPT
