Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Perrine on November 02, 2010, 02:13:18 PM
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I know that sounded weird but check this out...
there's unsettling similarities between the Japanese early 90s and the current crisis we have :uhoh
U.S. Hears Echo of Japan’s Woes
http://www.nytimes.com/2010/10/30/world/asia/30japan.html?pagewanted=2&_r=1
(http://graphics8.nytimes.com/images/2010/10/30/world/30japan-graf01/30japan-graf01-popup.jpg)
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How is deflation bad?
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Lower prices sounds good to me.
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Initially when you are forced to sell at a lower price, your cost have not reduced. This means less cash and a slowdown in manufacture.
Slow down in manufacturing then causes shortage and .... price rise. Anyone getting seasick :D
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With less money, it is more difficult to remain liquid. In addition, a $400,000 mortgage may seem doable, but with deflation, that figure may seem more like $500,000, as it increases the power of the interest rate.
-Penguin
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Initially when you are forced to sell at a lower price, your cost have not reduced. This means less cash and a slowdown in manufacture.
Slow down in manufacturing then causes shortage and .... price rise. Anyone getting seasick :D
There's even a word invented by economists called Japanification... These are the same guys that came up with Stagflation.
Japanification
Deflationary trap of collapsed demand that occurs when consumers refuse to consume, corporations hold back on investments and banks sit on cash. It becomes a vicious, self-reinforcing cycle.
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The difference is that Japan had(s) relatively low unemployment during their lost decades. The US on the other hand... :uhoh
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Japan's national debt is over 200% of GDP. In my opinion the only thing keeping Japan's economy from going into fullblown depression is that they still have a positive balance of trade with the rest of the world. (Although they did not for a couple of quarters last year).
The US has a trade deficit that will continue to grow as the world economy slowly recovers. The current US trade deficit is nearing 6% of GDP. In August, the US sold $153.9 billion in goods and services internationally, but bought $200.2 billion. That's a $46.3 billion deficit, and it will continue to increase. Wealth is leaving the US that will never return, unless it returns in the form of foreign investment, ie. US companies continue to be bought by foreign companies.
This is only the beginning.
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Interesting, this is something that Glen Beck talked about awhile back. At first i was puzzle, like a lot of thing in life, but understood what he was pointing out too.
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How is deflation bad?
I'm not sure deflation itself is necessarily bad, but some of the consequences can be.
edit: http://inflationdata.com/inflation/inflation_articles/Deflation.asp (http://inflationdata.com/inflation/inflation_articles/Deflation.asp)
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None of this matters in the long term picture. Within a few hundred years the earth will either be a single global nation or it will be destroyed by our conflicts.
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How is deflation bad?
Deflation is bad because the future value of money is greater than current value. This is an incentive to delay spending, which is bad for an economy that is based on consumption, as in the US.
How would this work with a mortgage? A house value deflates. A payment is constant. ... This is hurting my head. ... So, every mortgage would end up being more than the future, deflated value of the house.
Back to the OP: Japan had demographic (aging) issues that the US does not have to the same degree. And the US has a good record with technology. Who saw the internet coming 30 years ago?
None of this matters in the long term picture. Within a few hundred years the earth will either be a single global nation or it will be destroyed by our conflicts.
At least you are looking past the end of the Mayan calendar.
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The difference is that Japan had(s) relatively low unemployment during their lost decades. The US on the other hand... :uhoh
I think that's because their employers would rather share the loss and pain by reducing work hours to part time instead of reducing staff.
That "socializing" losses and gains... that's a bad word around here.
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At least you are looking past the end of the Mayan calendar.
Well, either way, the economics of individual nations will not be important in the near future.
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Back to the OP: Japan had demographic (aging) issues that the US does not have to the same degree.
true...
And the US has a good record with technology.
I see it like this. US has a good record with innovation and more tolerant to creative destruction that come with it than EU and japan.
Maintaining the lead on the other hand is iffy.
We came up with internet... but no longer lead in speed and penetration
GM came out with an EV1 electric car in the 90s and it scared japan... instead of GM nurturing EV they decided to scrap it and cede to likes of Nissan, Toyota etc.
The only way out of this rut is to innovate
if that doesn't work in the long run then US should go total war against [_fill-in-blank_]. No walk-in-the-park policing but total war!
It worked in WW2... and (based on the track record) everytime US wins a war it becomes stronger.
Who saw the internet coming 30 years ago?
al gore? :lol
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None of this matters in the long term picture. Within a few hundred years the earth will either be a single global nation or it will be destroyed by our conflicts.
That is only what they want you to believe. Global Government = Global Enslavement.
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Another huge difference is (economically) structural.
The Japanese banking system has been protected from the consequences of bad loans to such a degree that almost no bank goes out of business, no matter how badly it does - or how much of its "assets" are actually uncollectably bad loans. This has led to an gaggle of "zombie banks" that ought to be dead but keep on existing - and in the process keep on dragging money from the government that could be better used elsewhere.
That so far endless problem has been a major drain on growth and the economy in general.
Second problem - the Japanese government has such a MASSIVE tradition of pork barrel public work projects that it makes the US Congress look like rank amateurs. Another drag on the economy, that takes tax dollars from everyone and mostly benefits the insiders who get the contracts.
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That is only what they want you to believe. Global Government = Global Enslavement.
I'd love to meet this 'they'. The width, as opposed to the depth (which at extremes can), of government does not hinder its function.
-Penguin
P.S. IN
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I'd love to meet this 'they'. The width, as opposed to the depth (which at extremes can), of government does not hinder its function.
-Penguin
P.S. IN
I think the house rules forbid us from introducing you to 'they'. :D
I therefore abide the rules... :angel:
Sun
IBFTL
Pity too, could have been a cool thread :(
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I'd love to meet this 'they'.
The way things are heading, you might your shot... Literally. ;)
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Is the U.S. going.. What is the term from "With the Old Breed?" Asiatic?
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Initially when you are forced to sell at a lower price, your cost have not reduced. This means less cash and a slowdown in manufacture.
Slow down in manufacturing then causes shortage and .... price rise. Anyone getting seasick :D
If the economy slows down people are made unemployed so prices have no relevance, you can't buy goods at a higher price if you have no money :old:
In the UK we manufacture nothing anyway except potatoes.
The Germans still have a manufacturing base and when this is reduced due to the global economic climate (caused by free unrestricted credit) we best dust of our spitfires :banana:
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this will all shake out when the US becomes the old India / China and the rest of the world exports their jobs to us.
We'll be riding bikes, living in gov housing & speak spanish but we'll have < minimum wage factory jobs but what the heck - it was good while it lasted.
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this will all shake out when the US becomes the old India / China and the rest of the world exports their jobs to us.
We'll be riding bikes, living in gov housing & speak spanish but we'll have < minimum wage factory jobs but what the heck - it was good while it lasted.
Nah.
At worst - try like England. Human capital (education, skills) and infrastructure will keep us in the game. We just won't be the 800 pound gorilla everybody defers to.