The greatest stagnation, the economy that is Japan

by on August 17, 2015 at 2:18 pm in Current Affairs, Economics, Uncategorized | Permalink

From the 4th quarter of 2013 to the 2nd quarter of 2015 the Japanese economy grew by a grand total of 0.1%.  And the unemployment rate continued to fall, from 3.7% to 3.4%.  That’s right, over the past 6 quarters the Japanese economy has been growing at above trend.  But that blistering pace can’t go on forever.  The unemployment rate is down to 3.4%, and unless I’m mistaken there is a theoretical “zero lower bound” on unemployment that is even more certain than interest rates. The Japanese economy is like a Galapagos tortoise that has just sprinted 20 meters, and needs a long rest.

That is from Scott Sumner, there is more at the link.

1 E. Harding August 17, 2015 at 2:21 pm
2 Jimorbid August 17, 2015 at 2:28 pm

I was just about to post the same link. GMTA. The U.S. relies on population growth for GDP growth to a startling extent. I believe Japan’s per capita GDP growth outstripped or at least matched the U.S.’s during the 1990’s as well, but I can’t find anything on that after a quick google.

3 rayward August 17, 2015 at 2:42 pm

Sumner does point out that the working age population is falling at a rate of about 1.4% per year while employment is up about 1% over the past year and a half (Sumner’s estimate without looking it up), suggesting that productivity is actually falling. Are those leaving the work force more productive than those entering? That defies conventional wisdom about both geezers and their youthful replacements. Rather than encouraging geezers to retire and make room for more productive youth, maybe we should encourage the geezers to continue working and youth to stay in school (or at least stay out of the way).

4 E. Harding August 17, 2015 at 2:48 pm

Well, younger people do tend to earn less than older people. So no big surprises here.

5 Thiago Ribeiro August 17, 2015 at 3:23 pm

Do young people replace old people? Is a retiring 55-year old “Zaibatsu” CEO replaced by a twenty-something fresh from the University? Old people are not replaced by young people, they are replaced by slightly less old people.

6 A Definite Beta Guy August 17, 2015 at 7:04 pm

We import a lot of people that are extremely low productivity in their home nation and make them comparatively higher. Direct comparison of the real gdp growth figures is like direct comparison of French and US productivity stats per-hour: easy to inflate your numbers when you just don’t let any poor people work.

7 radical_centrist August 17, 2015 at 7:14 pm

yes, the USA does rely on population growth for GDP, and that is why Corp/Gov/Media loves mass immigration….gotta keep those corporate profits high…right?

8 Doug August 17, 2015 at 7:48 pm

So the Japan’s just about keeping pace with the US at raising native incomes from $38,000 to $39,000. But at the same time the US is also raising a lot of Guatemalans’ incomes from $1000 to $15,000. Seems to me that means the American economy is a hell of a lot better at creating wealth than the Japanese economy.

9 leftistconservative August 17, 2015 at 8:15 pm

creating wealth for the upper class is Holy.

Bless Our Sacred Immigrants, For It is They Who Grow The Holy GDP.

10 Doug August 17, 2015 at 11:25 pm

By far the biggest wealth created from moving a Central American peasant to the US goes to the peasant. Yes, some wealth accrues to domestic capital holders from both a higher quantity of labor and a slightly cheaper price. But corporate profits as a percent of GDP is only about 10%. There’s no reason to think that marginal labor GDP significantly deviates. Over 90% of the increase in wealth is going to the impoverished immigrant.

But my point wasn’t to defend or attack US immigration policy. If US and Japanese GDP/capita growth has been about the same, and the US has been incorporating many, mostly unskilled immigrants, over the time frame into the baseline, then the two figures aren’t comparable. The new immigrants are bringing down average productivity, so the fact that American GDP/capita is still keeping pace with Japan, tells us that the US would have massively outstripped Japan given equivalent immigration policies.

11 genauer August 18, 2015 at 3:46 am

at your service:

http://de.slideshare.net/genauer/gd-pper-capita-in-ppp-us-versus-euroarea-germany

Japan , US, and the EuroArea were growing in the last 10 years at the same average speed

Germany outperformed

12 JWatts August 17, 2015 at 2:37 pm

Yes, but what’s the debt payment per capita? Isn’t it rising very rapidly?

13 derek August 17, 2015 at 4:18 pm

This is like farting at a dinner party. Why bring up reality?

14 Jamie_NYC August 17, 2015 at 5:48 pm

The debt payments are modest, as the interest rates are extremely low. And they amount to internal transfer payments, since most debt is own internally.

15 Cooper August 17, 2015 at 2:45 pm

A shrinking workforce means fewer taxpayers which in turn means larger budget deficits.

It’s all well and good to say that the typical person in Japan isn’t much worse off than before. Unfortunately, the national debt does not decline alongside population.

Japan is averaging an 8%/GDP budget deficit for each of the last six years. Despite this massive dose of fiscal stimulus, growth remains muted.

What’s the medium term plan for bringing deficits down to sustainable levels? Is the plan just to keep depreciating the Yen down to 200-1 on the Dollar to melt away the debts?

16 Moreno Klaus August 17, 2015 at 3:21 pm

Almost the same budget deficit as Greece on average?

17 JWatts August 17, 2015 at 3:37 pm

I believe that Japan’s actual debt is worse than Greece’s.

18 Christian August 17, 2015 at 4:48 pm

Most of Japanese debt is held by Japanese. That’s good on one side, but on the other, they can’t simply default and let foreign creditors suffer. And if they don’t default we will see massive redistribution of wealth from the working age population to pensioners (who will likely hold most of the debt).

19 Bob August 17, 2015 at 5:27 pm

The pensioners are the parents and grandparents of the working population, no? Presumably the pensioners would give some of their money directly to their children and grandchildren, and when they die pass on their assets to them.

20 guest August 17, 2015 at 10:02 pm

And yet the interest rate Japan pays for its debt is minuscule, suggesting that it is in fact currently at a sustainable level.

21 Jan August 17, 2015 at 2:59 pm

Labor force participation rate? Isn’t it a bit low, and can it be increased?

22 Cooper August 17, 2015 at 5:10 pm

Theoretically, women could enter the labor force in large numbers but that would require a massive cultural shift, major investments in public child care and a complete revamping of Japan’s work culture.

Is it possible? Sure.

Is it necessary? Absolutely.

Will it happen? Probably not.

23 msgkings August 17, 2015 at 5:46 pm

If something is possible and necessary, why wouldn’t it happen?

24 required August 17, 2015 at 9:09 pm

The person to take care of the kids is still women, but with women working, it’ll be more kids per women of the poor.

Also, if Lady A hires Lady B to take care of her child, and Lady B hires Lady C to take care of her child, and Lady C hires Lady A to take care of her child, you’ll raise GDP and taxes, but it’s as productive as hiring people to dig hold hold fill them in.

25 Cooper August 17, 2015 at 9:51 pm

You’re assuming no economies of scale.

Women are quite capable of caring for more than a single child at a time.

The general guideline is 1 caregiver for every 6 pre-school aged chilren.

If each woman has two toddlers then two women could care for 12 children.

That allows 4 women to enter the labor force and do something more productive, generating revenue to pay the other 2 women.

This isn’t a permanent situation. Eventually the toddlers grow up and require less intensive supervision. The ratio of children to caregivers grows and the per capita burden decreases.

26 Chuck August 18, 2015 at 4:35 am

Why is it necessary?

27 spencer August 17, 2015 at 3:11 pm

According to the world bank over the last 5 years Japanese per capita real GDP growth has averaged 1.66%.

When you population is actually falling, standard economic data analysis can be very misleading.

28 msgkings August 17, 2015 at 3:21 pm

Yep….and in 50 years when the world’s total population is shrinking, will the world’s economic system (debt) be ready?

29 The Anti-Gnostic August 17, 2015 at 4:05 pm

Yes. The debts will be discounted or written off, and people will continue to buy, sell, earn, spend and save as before.

30 msgkings August 17, 2015 at 4:10 pm

So, debt really doesn’t matter?

31 derek August 17, 2015 at 4:19 pm

Obviously not. The fact that the standard of living of the diminishing number of old people depends on the debt that they are financing doesn’t seem to matter.

32 8 August 17, 2015 at 4:23 pm

Debt only matters if you’re the sucker holding it when the music stops.

33 JWatts August 17, 2015 at 5:51 pm

“Debt only matters if you’re the sucker holding it when the music stops.”

Which in this case is primarily Japanese pensioners. I suspect a lot of Japanese pensioners are using the interest payments from the bonds for a portion of their retirement income. There will be a lot of internal pressure no to default on the bonds, but at a certain point the payments will become unsustainable. Current debt to GDP is 240%, but if you net out the various levels of government owing each other, it’s only 140%.

Is that debt too high? Who knows?

34 gab August 17, 2015 at 6:08 pm

“…but at a certain point the payments will become unsustainable.”

Not if interest rates go negative. When bondholders are paying the government to hold bonds, the whole equation reversed and the problem goes away :/

35 JWatts August 18, 2015 at 11:52 am

“Not if interest rates go negative. When bondholders are paying the government to hold bonds, the whole equation reversed and the problem goes away :/”

LOL, is human nature that obtuse for you. No, the whole equation doesn’t reverse. Humans will react to adverse conditions. Instead the bond holders will start selling the bonds and the government will start finding it harder to locate willing buyers.

36 Lord Action August 17, 2015 at 4:22 pm

Almost no one predicts this. Even the UN has projected total population increasing through 2100. That said, fertility rates 50 years out are mostly guesswork.

37 msgkings August 17, 2015 at 4:34 pm

‘Even the UN’? The UN is always on the high side. There are a great many demographers expecting worldwide population to plateau and then shrink (slowly). I agree it’s not a consensus, but that’s IMO where we are headed. It’s just what humans do when they become prosperous, and child mortality falls, which it has almost everywhere and will likely do so everywhere eventually.

38 Dude August 17, 2015 at 4:47 pm

Kevin Kelly is one person predicting the shrinking of world population.
http://longbets.org/118/

It would be great to see a history of long term population predictions out of the UN. I suspect @msgkings is correct.

39 Lord Action August 17, 2015 at 4:47 pm

We’ve had this conversation before. Demographers are all over the map. The UN essentially assumes a convergence at “2,” which for most of the world is a reduction.

Shocks like the invention of birth control and the entry of women into the workforce simply can’t happen again, so you should expect that once that happens birthrates should rise again in the affected populations. These shocks, when they happen to a population, kill off the people who can’t adapt.

40 msgkings August 17, 2015 at 4:58 pm

Yes we have had this conversation before, and again I’ll say that Darwinian models of adaptation and fitness and reproduction in animals simply do not work for modern humans, both for the reason you describe (the technological ‘shock’ of birth control) and for a simple matter that humans are the only animals that consciously choose their family size.

It really is different now, L.A. I guess we’ll see (depending on how long we live).

41 Lord Action August 17, 2015 at 5:00 pm

Much of the population of 2065 is already born. It would take something really radical to see the population go down in that time frame. It’s just not realistic, even if you buy into msgkings’ theory that nobody sensible will want 2+ kids when they’ve got a nice car and an office job. It’s too fast for that kind of thing to take worldwide effect.

42 Bob August 17, 2015 at 5:32 pm

Birth control and family size planning doesn’t obviate Darwinism. I’m not sure why you think they do.

43 msgkings August 17, 2015 at 5:40 pm

@Bob:

Mainly because a big part of Darwinism involves animals making as many babies as they can. The ‘fittest’ make the most babies. The fittest humans (Bill Gates, Tom Brady, Brad Pitt, whomever you choose) would, if they were animals, have dozens of children, passing their successful genes on to many offspring. That’s not what happens.

I’m not saying there’s no longer any Darwinist forces at work in humans, but the advent of birth control and family planning is simply an exogenous variable that upends that theory.

44 msgkings August 17, 2015 at 5:46 pm

@Lord Action:

Your glibness about ‘a nice car and an office job’ reveals your blind spot. You have posted that where you live in a comfortable suburb you see lots of families with 3+ kids. Throughout the world, fertility is dropping, and it’s not always because they have a nice car and an office job. In fact it’s often because they have no car and no job.

My opinion is based on what’s actually happening: in EVERY country where child mortality drops and incomes rise, fertility plummets. You are basing yours on a speculation of what might happen: that fertility will climb again, someday, for some reason, even though people will continue to have birth control technologies.

45 Jamie_NYC August 17, 2015 at 5:59 pm

@mskings August 17, 2015 at 5:40 pm: you’ve got it backwards: The fittest are not those that you or I like (Giselle Bundchen, Scarlet Johansen for me; you listed your favorites above), it’s those that leave the most surviving descendants in particular environment. So, Darwinian forces are very much at work, they just don’t select for intellect.

46 msgkings August 17, 2015 at 6:15 pm

@ Jamie: My point is, why doesn’t Tom Brady or Bill Gates or Brad Pitt have 27 kids (I guess Pitt is working on it)? Because they aren’t chimpanzees is why. Same reason why Giselle (she’s hot but you can do better….) doesn’t have 12 of her own.

47 Bob August 17, 2015 at 6:33 pm

msgkings,

You don’t seem to understand Darwinism. Darwinian “fitness” is defined by reproductive success, not by how much money you have or how many Super Bowls you win.

48 msgkings August 17, 2015 at 7:22 pm

@ Bob: I always thought ‘fitness’ referred to animals most fit to survive, thrive, and reproduce in their environment. The ‘fittest’ males would have the most offspring with the ‘fittest’ females. The best would mate with the best, and thus more of those genes would be passed on. But those animals don’t ‘decide’ how many babies to make, they make as many as they can.

Humans do it differently. So if you are saying that some broke ugly mopes have 8 kids so they are ‘fitter’ than Tom Brady and his wife Giselle with their 2 or 3? OK, I guess that’s what the term means. My point still stands…the species is having fewer and fewer kids, full stop. I don’t see why that will change. It might plateau, but I don’t see how it will reaccelerate.

49 Bob August 17, 2015 at 8:09 pm

Ok, so you don’t understand Darwinism and or reject it. That’s fine, but in that case, you shouldn’t talk about what Darwinism says and predicts.

50 Cliff August 17, 2015 at 10:51 pm

msg, you never saw the movie ideocracy? If the broke ugly mopes have 8 kids and Bill Gates has 2, pretty soon we’ll all be broke ugly mopes having 8 kids… until the calculus changes

51 The Original D August 18, 2015 at 12:22 am

msgkings, don’t think of “fittest” in the sense of strength or health. Think of it like a puzzle piece. The fittest are those that best conform to the environment, which is not necessarily the strongest or richest. A virus could come along the kills everyone except for, say, diabetics, but one wouldn’t conclude that diabetics are healthier. They just happen to have a gene or genes that are more conducive to the environment.

52 Harun August 18, 2015 at 2:46 am

I just want to point out that when you look beyond Tom Brady, you indeed can find NFL stars with 20 kids.

There are also unemployed men on welfare with 20+ kids. (Frankly, being that smoove with that many ladies kinda sounds like work in the end.)

Easy-E also had double digit children.

There’s even some crazy Nazi white guy in NJ who has a lot of kids and the quiverfull and Mormons do, too.

53 Chuck August 18, 2015 at 4:44 am

Quantity does not necessarily mean more “fit”. There are far more bacteria than anything else. Does that mean bacteria are the “fittest” and all evolution since then has been a decline?

54 spencer August 17, 2015 at 3:15 pm

Over the same period US per capita real GDP growth averaged 1.4%, less than in Japan.

55 E. Harding August 17, 2015 at 3:35 pm

I made a graph of Japanese RGDP per employee compared with American:
http://research.stlouisfed.org/fred2/graph/?g=1DX7
The exact numbers on the Y-axis are not meant to be accurate, but the gist is clear.

56 TvK August 17, 2015 at 3:42 pm

On a per capita GDP basis Japan is doing fine. GDP growth could even be stuck at zero and keep on increasing on a per capita basis. Just keep on increasing productivity (easier said than done).

And there’s still some slack left in the labour force when it comes to increasing female labour force participation. Female labour in Japan comes in just under 49%, for comparison Sweden comes in at 60%, the USA at (56%)*.

http://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS/countries/JP-EU-US-SE-GB-DE?display=graph

Ultimately the total labour force will still be shrinking. Due to negative demographic momentum and low immigration. No increase in labour force participation will change that fact.

* The US seems to be on a downtrend since 2008.

57 E. Harding August 17, 2015 at 4:05 pm

In the long run, Japan since 1991 has fallen behind the U.S., even on a productivity basis, but has done so mainly during three periods: 1991-4, 1997-1999, and 2008-9. Since the Great Recession, it has slightly caught up to the U.S.

58 collin August 17, 2015 at 3:44 pm

At this point, how much of Japan is a demographic spiral greatly impacting the Aggregate Supply Curve. There is little unemployment in Japan. (Aging demographics attack the Aggregate Demand Curve first as most people decrease spending/increasing spending at age 50 and stop working age 60+.) And this is impacting the US as the unemployment rate under Obama terms is lower than Reagan’s terms.

My quesion with the competitive global economy and increased skills and productivity is how governments are going to get people to have larger families? Europe is simply a generation behind Japan. (And yes we see WSJ is celebrating that older millenials are getting married at 28 – 30.)

59 Lord Action August 17, 2015 at 4:03 pm

Teach the controversy: Japanese fertility is rebounding, albeit from a low level.

https://twitter.com/Edward_hugh/status/595983218488258561/photo/1

60 collin August 17, 2015 at 7:50 pm

And the Japan’s birth rate is increasing to over 1.5 babies/female. Long term that is still declining and not reversing any trend.

61 Cliff August 17, 2015 at 11:01 pm

Easy solution to declining fertility and economic stagnation: full deductibliity of child care as a necessary business expense for dual earner families. Get all those career women having babies and all those highly educated stay at home moms working.

62 Harun August 18, 2015 at 2:47 am

Why not just tax the childless?

Get all those working moms at home having babies.

63 Pshrnk August 18, 2015 at 11:49 am

And abolish Social Security and medicare.

64 Peldrigal August 19, 2015 at 10:29 am

Tax the childless and umarried was the solution of the Roman Empire. Ask them how it worked out.

65 Lord Action August 18, 2015 at 9:49 am

Obviously the question is where the rebound will end up. If it stops at 1.5, that’s a serious problem. If it stops at 4, we’re in good shape. If it stops at 8, that’s a serious problem.

66 Lord Action August 17, 2015 at 5:39 pm

This (from Nature) discusses the fertility rebound more broadly.

http://www.ssc.upenn.edu/~hpkohler/60046-popup.html

67 JWatts August 17, 2015 at 5:59 pm

“And this is impacting the US as the unemployment rate under Obama terms is lower than Reagan’s terms.”

Labor force participation would seem to be a more reliable metric than unemployment with regards to supplying transfer payments and paying on the debt/ keeping the deficit low. And the LFP has declined markedly since late 2008.

68 msgkings August 17, 2015 at 6:20 pm

LFP has declined markedly since 2000

69 Zack August 17, 2015 at 9:21 pm

Sort of. It peaked at 67.3% in early 2000. After a decline following that recession, it peaked again at 66.4% in January of 2007. Last month it was down to 62.6%.
https://research.stlouisfed.org/fred2/series/CIVPART

70 Barkley Rosser August 17, 2015 at 5:18 pm

It has just been reported that Japanese GDP declined slightly in the second quarter.

Regarding its debt, it is more than 200% of GDP, but besides being almost entirely domesticaly held, the interest rates on it are the lowest in the world, with Japan actually having been the first nation to have negative interest rates on some of its debt (initially back in the 90s). So, the actual burden and redistribution is not nearly as dramatic as it looks by looking at that debt total. Default is extremely unlikely, and those of you talking about the “music stopping” and such like are not likely to find your prediction coming true. If the markets thought there was a danger of default, we would see those interest rates rise, as they have in Greece.

71 Plamus August 17, 2015 at 5:42 pm

So you’re saying it’s impossible for Greece to be broke now? After all, 8 years ago their debt was priced a few basis points above Germany’s…

72 JWatts August 17, 2015 at 6:04 pm

That exactly. The bond market isn’t an oracle that can fully see into the future and Bond traders manage to lose money all the time. Greece is the most obvious example. Indeed, the yield on 10 year bonds dropped to under 6% in the third quarter of last year. There were clearly some optimists buying bonds at that point.

73 Barkley Rosser August 17, 2015 at 11:49 pm

JWatts,

Not quite as stupid as “Plamus,” but you are not on top of things either. Shocked by last year’s Greek interest rates around 6%? Well the 10 year bond rate is now around 9% and falling. Looks like a deal is being cut, problematic as it is.

In any case, for both of you, Japan is not Greece. Got it?

74 Barkley Rosser August 17, 2015 at 11:47 pm

No, Plamus. You are a moron unable to read.

75 Zack August 17, 2015 at 11:50 pm

Classic Rosser

76 MOFO. August 18, 2015 at 10:08 am

So your response is basically “fuck you”? I have to agree with Plamus and JWatts here, low interest rates today dont mean low interest rates forever.

77 Plamus August 18, 2015 at 1:49 pm

Thank you for the kind words. I am sure there is a hypercyclic morphogenesis explanation, but a moron like me cannot grasp it.

“In any case, for both of you, Japan is not Greece. Got it?” – And water is wet. What, are we not sharing truisms without any relevance to the discussion? Greece is not Argentina either, and managed to become broke nonetheless. And yes, Greece can get bailed out, Japan cannot. But hey, careful, you may pop a capilary, grandpops.

78 Barkley Rosser August 18, 2015 at 4:29 pm

Aw poor Plamus, picked on by meanie Rosser.

Do keep i mind, all of you, that Japan has had the lowest interest rates in the world for decades. Sure, they might go up some day, and gold might hit $5000 per ounce like some people have been (and still are) loudly predicting for some time. But, sorry, Japan is not like Greece or Argentina or any others of those nations that Tyler was posting about as candidates for having financial crises in the near future.

79 Plamus August 18, 2015 at 5:59 pm

Aw, poor Rosser, being disrespected by whipper-snappers with funny pants, and doodads, and facts.

“… Japan has had the lowest interest rates in the world for decades.” – Yes, and real estate prices in the US had not gone down in even longer than that… and then they did, almost overnight. I am sure a pro like you is also aware that the pricing of JGB’s at this point is almost entirely determined by BoJ, as virtually nobody else is buying the stuff at the current inflated prices (http://www.econotimes.com/Liquidity-in-Japanese-Government-Bond-market-53423). So you are pointing us to a government imposed de facto price ceiling and saying “Look, the market sees no trouble.” That’s not how markets work, grandpops… but why do I even bother, you know everything, your latest paper (http://cob.jmu.edu/rosserjb/COMPLEXITY%20AND%20BEHAVIORAL%20ECONOMICS%20-%20Rev%201.pdf) is from the future – January 2105, to be specific.

80 Zack August 18, 2015 at 7:26 pm

You argued that “If the markets thought there was a danger of default, we would see those interest rates rise, as they have in Greece.”
Plamus and JWatts responded by pointing out that the “bond market isn’t an oracle that can fully see into the future” and that just 8 years ago Greek debt was priced only slightly above Germany’s.

As usual, rather than admitting that you got nailed, you respond by spewing your typical childish insults and attempts to change the subject. Your shtick is getting old, Professor. Very old.

81 Barkley Rosser August 18, 2015 at 11:40 pm

Give it up, Plamus, you are such a loser.

Real estate prices in the US went down in the US. Go check it out, less than two decades before their big plunge after 2006. Go read Glaeser’s 2013 Ely lecture in the AER P&P, which covers the long history of regular real estate crashes in the US going back to the colonial period. You are in way over your head, boy.

As for Japan, well, i must confess that it now only has the second lowest 10 year bond yields in the world at .37%. Switzerland tops the list, trying to keep its currency from soaring against the euro, at -.21%, ooh ah.

82 Barkley Rosser August 18, 2015 at 11:45 pm

As for you, Zack, Greece has had a long record of defaulting on its foreign debts gong back over the last two centuries, beating out almost every nation on the planet. In contrast, Japan has never done that, never, partly because, as I pointed out and extend here further, it has never relied heavily on foreign borrowers, usually a net creditor, being in fact #2 in that category right now with massive foreign exchange holdings, in rather sharp contrast with Greece.

Oh wow, around the peak of massive speculative bubbles that would crash shortly, Greek interest rates were not too far above those in Germany, although far above those in Japan, which is the issue here, boy, proves pretty much nothing.

Sorry. Both you and Plamus should go home and go to your rooms without supper, your performances being so spectacularly embarrassing.

83 Barkley Rosser August 19, 2015 at 1:31 am

Plamus,

Real estate prices in US went down at end of 80s in US, less then 20 years before they went down again after 06.

84 Zack August 19, 2015 at 8:29 pm

Barks,

Thanks for the nice reply. As usual, you completely prove my point. Like I said, childish insults and attempts to change the subject. You made an argument that low interest rates today proved that the markets did not see any danger. The other posters made a legitimate point about bond markets and used Greece’s recent history as an example. Rather than simply admitting as much and moving on, you unleashed your tired routine of personal attacks and straw men. Your insults aren’t even clever. It’s the type of stuff I would expect to hear from a six year old. I’m surprised you didn’t accuse Plamus of having cooties. As I said before, your routine is getting very tiresome.

85 Barkley Rosser August 19, 2015 at 11:28 pm

Zack,

Sorry, neither you nor Plamus has been proven right at all, so take all your huffy self-righteousness and go eat a hot dog.

Tell me one time that Japanese interest rates have ever been lower than those in Japan. Oh, I think I can think of one possible time, 1945, but I cannot find the figures, and given the impending civil war in Greece, maybe not even then.

Deal with it. Both of you are full of it.

86 Zack August 20, 2015 at 12:13 am

Barko,

“go eat a hot dog.” Umm…ok. Is that supposed to be some kind of insult or something?

“Tell me one time that Japanese interest rates have ever been lower than those in Japan.” Are you drunk? I never claimed anything even remotely close to this. Your comments are starting to border on total incoherence. Time after time you’ve done nothing except dodge, try to change the subject, hurl personal attacks, and project your bogus straw man arguments onto others.

87 Barkley Rosser August 20, 2015 at 12:29 am

Zack,

This thread is about to roll over, but you are really getting silly. I have never been a big fan of any kind of perfection of bond markets, and have long pointed out the perniciousness of speculative bubbles and have called them a lot better than most people, including calling the crash in 2008 much better than all but a handful. And that is the point. Plamus came on all big about how in 2007 Greek interest rates were not all that much higher than German ones, but Greek interest rates have never been the issue here. It is you clowns who want to play Tyler games and go on and on about Greece.

The issue is and has been Japan, and when one sees certain patterns persisting over decades, that means something. Interest rates in Japan have been among the world’s lowest,actually the rock bottom lowest for much of the time, over the last several decades. That means something. Japan is not remotely in danger of any sort of default. Heck, Switzerland may be in more danger of default than they are, even though they curently have negative t0 year bond interest rates.

This whole meme of dragging in Greece has been just unbelievably stupid and ignorant in the extreme by both of you, just a ridiculous joke,and, sorry, but I am not about to apologize to a scum like you who is dropped far more personal insults on me than I have on you. Go eat three hot dogs, please.

88 Zack August 20, 2015 at 10:19 pm

Barky Bark,

You make less and less sense with each post. In case you’ve forgotten, YOU were the one who started this when you said “If the markets thought there was a danger of default, we would see those interest rates rise, AS THEY HAVE IN GREECE.” No one else was “dragging Greece in.” It was you, Professor! Is your memory so poor that you’ve forgotten what your own statement was to begin with? Hahahahahahaha.

For the last time: the other commenters only said that your remark about Greek interest rates was a poor example and pointed to the recent history of Greek bonds. Rather than just admitting you used a bad example, you angrily attack, dodge, and repeatedly try to change the subject. Nobody said Japan was the same as Greece. Nobody said Japan was the same as Argentina. Nobody said anything about gold prices. I also never claimed Japanese interest rates had been lower in the past than they are now. I never claimed Japan was on the verge of default, either. Look up the term “straw man” as it sums up each and every one of your inane attacks on this page.

As far as tone, I’ve never called you or anyone else anything resembling “moron,” “scum,” “stupid,” “loser,” etc. I guess those are the only grade school level insults you could come up with, so you now turn to asking me over and over to eat a hot dog (whatever the hell that means). Again, your memory seems to be failing you here if you can’t remember your own comments. I’m almost starting to feel sorry for you as you are obviously an angry, bitter human being who gets off on hurling nasty personal insults at people on an economics website of all places…and apparently on the vision of other people eating hot dogs…you may want to seek some help for that one, friend.

89 Axa August 18, 2015 at 5:08 am

Domestically held debt it’s not magic. I understand the narrative, Japanese like to hold government debt even if yields are non-existent. However, these are the decisions taken by the Japanese from 2010 or 2015. Today’s debt holders will eventually die and inherit it to their descendants. Will the descendants in 2035 take the very same decisions? Holding Japan debt is not a rational outcome, I would worry about generational changes.

Also, there are some bad incentives in this situation. Perhaps, the best way to signal Japan’s solvency is to ask for more money, just saying “we’ll honor the debt” is not enough. If today, Japan acknowledges the debt may not be sustainable some domestic holders would want their money back and cause large problems.

90 unwinding August 17, 2015 at 5:35 pm

Why is Japan doing so poorly compared to German? Japan and Germany both have the oldest average population ages and are export orientated economies. But Germany appears to be doing much better in terms of GDP growth per capita over the past 5 years.

Germany (2010-14) 4.3 3.6 2.1 -0.2 1.3
Japan (2010-14) 4.6 -0.3 2.0 1.8 0.1

Why is Germany doing better?

91 JWatts August 17, 2015 at 6:07 pm

“Why is Germany doing better?”

The euro currency, being somewhat of a weighted average of the various countries relative economies, is artificially low from Germany’s point of view making their exports more competitive.

92 msgkings August 17, 2015 at 6:22 pm

Bingo.

93 E. Harding August 17, 2015 at 7:13 pm

Germany has only been doing significantly better as of 2006. In 2005, it still had a 12% unemployment rate!

94 genauer August 18, 2015 at 11:04 am

@ J_Watts, E.Harding

contrary the the eternally repeated myth

Germany has always favored a strong currency, because Germany profits from them:

a: Deutschmark times pre reunification 1990
http://de.slideshare.net/genauer/currencies, page 2

b: During Euro times, correlation

Year , German Currency Account surplus in % GDP, Euro / Dollar Exchange rate
2000 __ -1.75 __ 0.924
2001 __ -0.36 __ 0.896
2002 __ 1.89 __ 0.944
2003 __ 1.43 __ 1.131
2004 __ 4.50 __ 1.243
2005 __ 4.67 __ 1.246
2006 __ 5.78 __ 1.256
2007 __ 6.90 __ 1.371
2008 __ 5.78 __ 1.472
2009 __ 5.83 __ 1.393
2010 __ 5.69 __ 1.327
2011 __ 6.08 __ 1.391
2012 __ 7.14 __ 1.286
2013 __ 6.74 __ 1.328
2014 __ 7.45 __ 1.329

@ E. Harding

The Change in Germany started in 2003 with Agenda 2010, and that is what Germany is doing better

massively increasing employment

http://de.slideshare.net/genauer/imf-2014-weo-data-sampler-3-kompatibilittsmodus, page 9

95 genauer August 18, 2015 at 11:06 am

correlation 0.90 that a strng currency is good for Germany:

Year , German Currency Account surplus in % GDP, Euro / Dollar Exchange rate

2000 __ -1.75 __ 0.924

2001 __ -0.36 __ 0.896

2002 __ 1.89 __ 0.944

2003 __ 1.43 __ 1.131

2004 __ 4.50 __ 1.243

2005 __ 4.67 __ 1.246

2006 __ 5.78 __ 1.256

2007 __ 6.90 __ 1.371

2008 __ 5.78 __ 1.472

2009 __ 5.83 __ 1.393

2010 __ 5.69 __ 1.327

2011 __ 6.08 __ 1.391

2012 __ 7.14 __ 1.286

2013 __ 6.74 __ 1.328

2014 __ 7.45 __ 1.329

96 Xik August 17, 2015 at 6:25 pm

Could it be that more Japanese working abroad over the same period contributed, in part, to the decreasing unemployment rate? If it does, by what factor is the contribution over the same period?

97 E. Harding August 17, 2015 at 6:39 pm

Why does nobody care about the Great Italian Stagnation:
http://research.stlouisfed.org/fred2/graph/?g=1E1n

98 E. Harding August 17, 2015 at 6:50 pm

Not even Germany can escape from the Demographic Death Spiral!:
https://research.stlouisfed.org/fred2/graph/?g=1E1D
2010=.1

99 E. Harding August 17, 2015 at 6:57 pm

Or, viewed since Q1 1991, when Japan’s future looked really bright:
http://research.stlouisfed.org/fred2/graph/?g=1E1O

100 collin August 17, 2015 at 7:51 pm

I had an economics teacher in 1993 that stated the low birth rate would be a problem in Japan.

101 Todd Kreier August 18, 2015 at 2:27 pm

That doesn’t surprise me.

Economists who factor in likely changing technology in coming years is vanishingly small. c.f. The Great Stagnation

Low birth rate isn’t a problem now nor will be as the standard of living keeps increasing.

102 brian h. August 17, 2015 at 7:36 pm

We sure get a lot of Japan-pessimism in the US media, but they have significantly better quality of life than Americans or Europeans by any metrics that matter: job security, health, life-expectancy, crime rates, unemployment, obesity, etc. Japan was more orderly and stable post-Tohoku than the USA is on any given day.

103 Jason Bayz August 17, 2015 at 9:02 pm

+1

104 E. Harding August 17, 2015 at 9:05 pm

Wonder if that applies to the Japanese in America as well. 🙂

105 Cooper August 17, 2015 at 9:30 pm

The number of Japanese-Americans has been shrinking since 1990. They have the oldest demographic profile of any non-European ethnic group in the United States.

106 E. Harding August 18, 2015 at 6:40 pm

The problem with studying them is that many are interbred with Whites.

107 derek August 17, 2015 at 10:11 pm

Viva la xenophobia!

108 JWatts August 18, 2015 at 12:15 pm

The Japanese certainly rank well in some metrics, but I disagree that they rank well by all metrics that matter:

They are in the bottom half of countries when ranking by happiness. And near the very bottom if you only look at developed countries.

https://en.wikipedia.org/wiki/World_Happiness_Report

109 Steve Sailer August 17, 2015 at 11:34 pm

Japan hasn’t made much money for Wall Street over the last quarter century so we constantly hear about how horrible Japan is.

110 msgkings August 18, 2015 at 2:20 am

Do ‘we’?

111 Art Deco August 18, 2015 at 6:33 pm

I’ll wager we hear about how ‘horrible’ Japan is because reporters are nearly innumerate and do no library research or anything resembling it. They trade in narratives and banal reality does not interest them so we get florid nonsense.

Japan’s problem, and Korea’s, and Taiwan’s and Germany’s is wretchedly low fertility. That will slowly strangle them unless they rediscover reproduction

112 E. Harding August 18, 2015 at 6:41 pm

I don’t think that’ll strangle them; it’ll just lead to some stiffing of geezers.

113 leppa August 18, 2015 at 12:06 am

Also Viva la zen-philia!

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