Friends, today I share you with this intriguing economic analysis, which compares the current bull market for stocks in the U.S. with the bubble that burst in Japan in 1989, and from which that country has still not recovered. In essence, Japan has spent more than a generation without any appreciation in stock values whatsoever -- if one measures current performance against the all-time high. What does all this mean? Not necessarily a lot for the United States, because the two situations are so different, but what it does mean is that one of the verities of American investing -- that the stock market is a good bet, because "in the long run" it always goes up -- is not entirely bulletproof. National economies and equity markets can stall over the long run, with very serious consequences for investors and for society as a whole. Japan has been doing a lot of soul searching because of its economic and financial malaise, not to mention the prevalence of depression and the low birth rate, which also seem symptomatic of a culture that's run aground. Note that one problem that hasn't afflicted Japan, despite its economic woes, is a lack of credit. Interest rates have remained low, and government borrowing hasn't been constricted, despite the fact that Japan shoulders public debt levels considerably higher than ours. That may mean that we spendthrift Americans can fritter away a whole lot more public money before that particular chicken comes home to roost.
RAY TO DR. WADDY
ReplyDeleteWould like to read the link article, but I can't, unless I have a prescription to The Wall Street Journal. Thanks anyway.
Dr. Waddy from Jack: Can't get the WSJ article but WSJ is such a respectable source that I'm going to look into subscribing. I have very little understanding of economics and finance but I'll offer this morsel about the Japanese, for whatever it might be worth in this discussion. I attended an international Chinese language school at a Singaporean university in 1973. There were many Japanese in attendance. I swear, if they saw you (improbably) studying 18 hrs. a day they would study 19 hours. I think they are a very dynamic people and now that they have their heads on straight after their tragic outbreak in the '30s and '40s and have experienced the well being their positive living can generate, I think they will weather any economic storm. I hope so; I treasure the wonderful experiences I had in their fascinating country and in studying them at college afterward.
ReplyDeleteRAY TO JACK
DeleteYou are a ICHIBAN guy!
Nick, one of the major differences between Japan's economy and the U.S. economy is that Japan had enormously long distribution chains, with each part of the chain taking its own little piece. While Japan's economy was booming, that rather inefficient system wasn't seen as an issue. Once the boom started to slow, the distribution system was seen for the burden that it was. It takes a long time to unwind an economic system, as we can see in terms of Japan. The hope for that economy is that it has always put in sufficient money for pure research, so that the economic system can continue to be innovative. The issue now for Japan is having sufficient capital to scale those innovations so that they can be competitive.
ReplyDeleteEven though Japan's situation is considerably different from ours, the point is well taken that there is nothing inevitable about the stock market going up, or at the rate it currently is increasing. It didn't reach 1000 until Nov. 14, 1972, or 10,000 until March 29, 1999. Friday, the DJIA finished at 38,654.
By the way, those figures represent an interesting statistical issue. In less than 27 years (1972 to 1999) the market increased 10-fold, while in about 25 years (1999 to 2024) the market increased 4-fold. Yet, the market only increased 9000 points in the first time period and 28,500 points in the second time period. Which increase is more impressive?
Who gives a rat's ass about Japan? The United States of America is perishing under the rule of a junta of Leftist ass wipes. F**k Japan!
DeleteDr. Waddy from Jack: Another of my presumptuous segues: much being said about a prospective border bill being championed by the dems. I think this can be nothing other than the dems throwing up a smoke screen for Biden's use in his campaign. "Well, we passed a bill, so the border is now under close control, period." The administration can be counted upon to illegally ignore any part of such a bill which would hamper the flow of illegals; their behavior in office confirms it.
ReplyDeleteDr. Waddy from Jack:Also, their connection of this bill to funding to support both Israel and Ukraine (since both are at very consequential war, this can be assumed to be ostensibly to support their war efforts) offers those who hold that supporting Ukraine was a terrible mistake and that continued support of the fight is "throwing good money after bad", an opportunity to put things grimly right by removing the funds for the Ukrainian fight. An awful reckoning with the tragic reality that Russia would and will never tolerate Ukrainian membership in Nato must be faced. Of course, the Administration got cute and cynically equated Israel's fight with that of Ukraine when it tied funding for both in this bill (and the dem party's disgraceful countenance of murderous Jew haters in its membership places its motives thereby in a very questionable light) , all dependent on supporting their cynical and disingenuous "front" in this
ReplyDeletebill, of sweet surrender to America on their "failure" to control illegal immigration - all the better, only, to enhance their chances of winning in November and then bringing to a head their now three year campaign to foment unendurable social disorder to clear the way for their ever more promising (as they see it )marxist totalitarian takeover.
Well, drat! The WSJ/Fox Empire always wants to extract its pound of flesh, doesn't it?
ReplyDeleteJack, I don't doubt that the Japanese studying in Singapore in 1973 were impressive in every way -- but are their grandchildren? Depends on the relevant standard, I suppose. They may still blow American schoolkids out of the water... The Japanese may also be fairly content with their present economic situation. I mean, if your economy grows at a torpid 1% a year, but your population DECLINES by 1% a year, then your standard of living, logically, is still going up.
Rod, I'd say a ten-fold increase beats a four-fold one every day of the week! And, sure, the Japanese economy was concealing plenty of inefficiencies and weaknesses prior to 1989...but what economy isn't? You can always come up with reasons why any economy is doomed. In the long term, moreover, the doomsayers are always right!
Jack, I disagree, but only "tactically". Yes, the Dems want a porous border, but quite possibly they don't want a TOTALLY porous border between now and November 2024. They probably figure that, if they can just frisk aside this Trump character, they can then let the border go completely to hell and the voters will have to lump it. I expect they're right, too.
I find it suspicious that a "border" bill contains way more money to defend the Ukrainian border than our own...but at this point I shouldn't be surprised.
Dr. Waddy from Jack: Dang good point about the dems displaying much greater regard for Ukraine's national integrity than for our own. I think we can be certain that this biil is a front; perhaps the dems mean for it not to pass so that they can charge insincerity and inconsistency of those who see the policy for what it is.
ReplyDeleteDr. Waddy from Jack: Please pardon my misspelling of "bill" above. That is the Babylonian spelling, with which I am thoroughly familiar from my in depth knowledge of cuneiform.
ReplyDeleteJack, your vast wiisdeem does you credit!
ReplyDeleteLet's face it: whether this bill passed or didn't pass, the Dems were always going to blame the border crisis on Trump. That's a reflex for them, at this stage. It's unlikely they could come up with another theory, even if pressed.