Turning Japanese; How Japan's post-bubble policies produced a "lost decade." (loan, 2014)

[70Ford]

Turning Japanese: Japan's post-bubble policies produced a "lost decade." So why is President Obama emulating them? - Reason Magazine

The scenario was eerily familiar. A long real estate bubble that had expanded extra rapidly for the previous five years suddenly burst, and asset prices came crashing back down to earth. Banks and financial institutions were left holding piles of worthless paper, and the economy soon headed south. The national government responded to the crisis by encouraging more lending and spending previously unfathomable amounts of money on public works projects in an effort to stimulate consumer spending and restart growth...

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I wish to God it didn't mention Obama. 'Cuz it has the ability to become an "Obama thread." And there's a forum for that. A different forum.
I thought it was interesting. I thought I'd share.

[floridasandy]

yep, you can't build a foundation on shifting sand:
Overaggressive financial institutions and poor risk management that ignored traditional economic fundamentals. In both Japan and the U.S., excessively optimistic expectations led to bad investment decisions from Wall Street to Main Street and a pervasive culture of denial that there was any bubble at all.

all you have to do is look at it on a small scale:
http://globaleconomicanalysis.blogsp...ion-costs.html
The CalPERS chief actuary says pension costs are "unsustainable," and the giant public employee pension system plans to meet with stakeholders to discuss the issue.

"I actually think it is sustainable," said Terry Brennand of the Service Employees International Union. He said the basic problem is investment losses, not high benefit levels. (culture of denial)

"What is sustainable?" said Lou Paulson of the California Professional Firefighters. He said proposals to extend the retirement age for firefighters from 50 to 55 would result in more injuries with advancing age, driving up workers' compensation costs. (culture of denial)

CalPERS, the state’s public employee pension fund, lost $56 billion last year, almost a quarter of its value.

Given the painful recession that followed the collapse of the housing bubble, the losses may not be so surprising.

However, you should be shocked by CalPERS’ irresponsible recovery plan.

CalPERS, the nation’s largest pension fund with assets of $180 billion, plans to pump more money into junk bonds, hedge funds, real estate and commodities. The same risky investments were a large part for last year’s record loss. In fact, CalPERS had to sell stocks in a bear market to meet cash calls for its private equity and real estate partnerships.

[le roi]

Originally Posted by floridasandy

yep, you can't build a foundation on shifting sand:
Overaggressive financial institutions and poor risk management that ignored traditional economic fundamentals. In both Japan and the U.S., excessively optimistic expectations led to bad investment decisions from Wall Street to Main Street and a pervasive culture of denial that there was any bubble at all.

all you have to do is look at it on a small scale:
Mish's Global Economic Trend Analysis: CalPERS Admits California "Pension Costs Unsustainable" - So What To Do About It?
The CalPERS chief actuary says pension costs are "unsustainable," and the giant public employee pension system plans to meet with stakeholders to discuss the issue.

"I actually think it is sustainable," said Terry Brennand of the Service Employees International Union. He said the basic problem is investment losses, not high benefit levels. (culture of denial)

"What is sustainable?" said Lou Paulson of the California Professional Firefighters. He said proposals to extend the retirement age for firefighters from 50 to 55 would result in more injuries with advancing age, driving up workers' compensation costs. (culture of denial)

CalPERS, the state’s public employee pension fund, lost $56 billion last year, almost a quarter of its value.

Given the painful recession that followed the collapse of the housing bubble, the losses may not be so surprising.

However, you should be shocked by CalPERS’ irresponsible recovery plan.

CalPERS, the nation’s largest pension fund with assets of $180 billion, plans to pump more money into junk bonds, hedge funds, real estate and commodities. The same risky investments were a large part for last year’s record loss. In fact, CalPERS had to sell stocks in a bear market to meet cash calls for its private equity and real estate partnerships.

double or nothing!

[jimhcom]

We are actually in much worse shape than Japan was. Japan had a more highly educated, more ethical, and harder working population, that saved a much higher percentage of its income and did not expect the government to give them everything for free. We on the other hand are running up huge debts we cannot afford to repay, because we are not smart enough to realize there is no easy way out of what we have done.

[wheelsup]

Originally Posted by jimhcom

We are actually in much worse shape than Japan was. Japan had a more highly educated, more ethical, and harder working population, that saved a much higher percentage of its income and did not expect the government to give them everything for free. We on the other hand are running up huge debts we cannot afford to repay, because we are not smart enough to realize there is no easy way out of what we have done.

Japan has 3x the debt levels of the US:



We're not that screwed. Yet.

[f_m]

Originally Posted by wheelsup

Japan has 3x the debt levels of the US:



We're not that screwed. Yet.

If you include personal debt, then the US number goes up quite a lot.

[jimhcom]

Originally Posted by wheelsup

Japan has 3x the debt levels of the US:
We're not that screwed. Yet.

http://www.google.com/url?sa=t&sourc...-OqDjVe9d1QL6A


That chart is from 2008 and I would bet our debt is nearing 2x what it was then. It could reach 100% of GDP by 2014. Here is an article that makes the comparison of debt to income and Japan does much better in that category. Also remember Japan is a net exporter vs. the US being a net importer.