you may recall that when the Japanese debt and asset bubble topped out, nary a soul predicted a 10-year long bear market/liquidity trap/depression. the naysayers had approximately the same credibility problem as Mr. Tice enjoys now.
The funny thing about the above statement is that even a stopped clock is right twice a day (no offense meant personally towards you, of course). Tice or Noland (I thought that article was written by Tice) will one day be correct, maybe, but that time is not now. The money flow is too great from the baby boomers saving for retirement.
Ironically, according to Harry Dent, one of the reasons that Japan is currently in the situation they are now is that they went through their baby boomer savings/investing boom during the '80s and that led to the bubble they experienced, which quickly collapsed as the Japanese divested themselves of stocks and put their yen into bonds that were yielding a far higher percentage rate than they are now.
The US will quite likely see the same thing occur when our boomers start looking for safe havens instead of growth some 5-10 years from now (maybe longer.. who really knows?) and the govt had better be prepared for that eventuality.
But one thing that differentiates the US from Japan is that their economy has always been more heavily regulated and influenced by their government ministries. Not quite a socialist economy, but depending on the sector, certainly more interventionalist than has been the US historically.
I still remember how the US complained about the subsidization from MITI, the Kureitsus (still there), corporate cross ownership of stock that prevented foreigners from buying controlling stakes in their corporations, and constant inability of US corporations to snag a foothold in their distribution systems. The dumping of memory chips by Japan put many of our companies nearly into bankruptcy.
Btw, I read today that Japan's national debt has reached 130% of GDP while the US National Debt has been reduced to 73% of US GDP (Dec, 1999 figures). So the very issues that are of so much concern here in the US, are even more of an issue in Japan.
One major factor about Japan is that their citizens have somewhere around US$12 trillion in savings, much of which in postal savings and govt bonds that are due to mature over the next 2-10 years. Where they decide to re-invest that money is a matter of great interest for the US and why we're seeing US brokerages and banks finally expanding into that country. And considering that the Japanese people are looking at a monetization of that national debt, or increased taxation on their assets in order to service the debt. They will likely be very be very attentive to such investment options.
Not that I've completely lost hope for Japan.. but they have a huge debt burden that will continue to hobble their economic growth possibilities.
Regards,
Ron |
