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Old 02-18-2009, 12:06 PM   #21
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I am worried about the debt load on future generations. I don't understand the gov't increasing spending and cutting taxes.

Now I hate paying taxes. But, I certainly don't think we should be cutting them right now.

Soon it will be mathimatically inpossible to pay back the debt!
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Old 02-18-2009, 01:25 PM   #22
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Has anyone back tested the 3-4% SWR idea in an environment like Japan's 20 year recession? Will it work? Are we doomed?
Interesting question, I haven't seen any SWR studies for countries outside of the US. My gut level tells me that with the declining stock market and 0 interest rates since the early 90, a Japanese who retired in 1989 would be in a world of hurt with Nikki dropping from 39K to 7,500. The slightly better news is a 30 year retiree would have seen the Nikki raise from 5K to 7500.
I am not sure how a bond portfolio would have performed during the same time period but I suspect it isn't great since interest rates were down.

I think the only hope for a Japanese retiree was to switch from an aggressive 80/20 equities portfolio and than switch to 50/50 portfolio in 89 or 90. I.e. perfect market timing is the remedy for all bear markets
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Old 02-18-2009, 01:33 PM   #23
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Seems like the auto companies are toast. Only a structured bankruptcy will save them. These "loans" are akin to using a ventilator on a brain dead patient. Delays the inevitable.
what he said.
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Old 02-18-2009, 01:40 PM   #24
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I'm hearing details of a pending deal between Detroit and the UAW. As usual, tinkering around the edges and not addressing the legacy costs that are killing them. Another band-aid over a bleeding amputation.
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Old 02-18-2009, 02:36 PM   #25
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I think the only hope for a Japanese retiree was to switch from an aggressive 80/20 equities portfolio and than switch to 50/50 portfolio in 89 or 90. I.e. perfect market timing is the remedy for all bear markets
Or heavy diversification out of his home market. Which would be a little easier for a citizen of Japan than a US citizen. Foreign diversification helps more when the problems are largely restricted to your home island, but less useful when the whole developed world gets hit (as it is now).
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Old 02-18-2009, 06:17 PM   #26
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Or heavy diversification out of his home market. Which would be a little easier for a citizen of Japan than a US citizen. Foreign diversification helps more when the problems are largely restricted to your home island, but less useful when the whole developed world gets hit (as it is now).

While you are right that a Japanese citizen would have been better investing in a foreign market. The value of his foreign stocks would have plummeted as the Yen dropped from the 200-250 range in 1979 to the current 90-95.

It seems to me an early retiree in Japan without a pension, would be in serious financial trouble right now.
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