Comments on: Does Japan show us the way out of secular stagnation? http://blogs.reuters.com/nicholas-wapshott/2013/12/02/does-japan-show-us-the-way-out-of-secular-stagnation/ Wed, 26 Nov 2014 19:47:54 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: ewha http://blogs.reuters.com/nicholas-wapshott/2013/12/02/does-japan-show-us-the-way-out-of-secular-stagnation/#comment-1600 Sun, 08 Dec 2013 21:10:00 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=960#comment-1600 Great write, insightful! One thing is that the proverb, “If you do not enter the tiger’s cave, you will not catch its cub” is Chinese, NOT Japanese. There is no wild tiger in Japan. Just like many other cultural things, the Westerners tend to introduce Chinese things as Japanese, especially people from the US as they study, or used to study about Asia though Japan. But it is actually not easy to find things that are genuinely originated in Japan, and you cannot ignore the Chinese influence when you try to see the Japanese culture. Maybe it was ‘OK’ to introduce Chinese things as Japanese during China’s communist era in the past…

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By: brianpforbes http://blogs.reuters.com/nicholas-wapshott/2013/12/02/does-japan-show-us-the-way-out-of-secular-stagnation/#comment-1578 Wed, 04 Dec 2013 08:44:35 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=960#comment-1578 One more follow up point, deflation is actually necessary for Japan because prices are out of control as it is ($18 to see a movie in the theater, $27 for a CD). Prices are going down because the greediness of Japanese merchants has already set prices far above any reasonable market value.

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By: brianpforbes http://blogs.reuters.com/nicholas-wapshott/2013/12/02/does-japan-show-us-the-way-out-of-secular-stagnation/#comment-1575 Wed, 04 Dec 2013 08:29:34 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=960#comment-1575 I’m always confused by economists’ collective lament about the horrors of the Japanese economy. There are very few that would claim that the US has a higher standard of living than Japan. Unemployment is far lower, there are trains, and the cities have a level of cleanliness found nowhere in America. This is economic failure ? The failure seems to be with economists’ definition of economic distress.

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By: daviddenton http://blogs.reuters.com/nicholas-wapshott/2013/12/02/does-japan-show-us-the-way-out-of-secular-stagnation/#comment-1565 Tue, 03 Dec 2013 17:03:54 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=960#comment-1565 The problem that has been nagging at me is that during this period of low growth there has been the relatively stead level of asset prices – following the credit crunch, as one might have expected asset prices fell, but recently prices have been rising rather than staying low until the recovery is secured. In reality asset prices recovered very quickly and remain stubbornly high despite low growth. So we have this strange set of circumstances where consumer demand is but asset prices are very high.

The main problem here is that asset prices are stuck at levels that make rapid growth unlikely, the Dow has just breached 16,000 for the first time. The world has become capital rich and income poor. This imbalance in the relationship between those who own assets and those that rely on income from these over-priced assets is killing us. The benign environment that exists for the owners of capital is driven by misguided policy making that reduces taxes on profits and allows owners to avoid their tax obligations. This in turn means that:

1. There are too many badly run businesses that are not investing for the future and there are many poor performing business that have not been sold or restructured (Zombie companies)

2. This lack of investment (coupled with the banking crisis in liquidity) in new ideas encourages the owners of capital sit tight on their under-performing assets. The Private Equity industry has been an obvious offender (see the chart below)

3. As businesses bump along the bottom they squeeze employee salaries and so consumer demand drops

4. This imbalance between the owners of capital and employees is accentuated by negative real interest rates and deflation. Small scale savings have been decimated whilst the mega rich have seen asset prices rise and rise

http://getwd50.blogspot.co.uk/2013/11/th e-cause-of-secular-stagnation.html

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