Japan officially in recession
- Thread starter samclem
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Agree. These "experts" seem to have no idea what is needed to fix the problem. They speak very well, and seem knowledgeable, but, it's just a lot of "hot'' air. Academia.
In the real world, if they worked at a private company, and made such big
blunders, they'd be long gone.
As for me, I wish they'd quite talking about "raising the interest rates".
It's been years now, and they keep predicting, oh, next year, expect rates to increase,,,so invest short term.....blah blah blah.....such a waste of time.
In the real world, if they worked at a private company, and made such big
blunders, they'd be long gone.
As for me, I wish they'd quite talking about "raising the interest rates".
It's been years now, and they keep predicting, oh, next year, expect rates to increase,,,so invest short term.....blah blah blah.....such a waste of time.
Lakewood90712
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"Japan officially in recession"
My amateur economist opinion is they have been in recession for the last 30 years or so, never came out .
I'm afraid the west is headed for the same fate, if not already there. You just can't expect real growth by off-shoring manufacturing then creating artificial consumer / infrastructure demand with endless central bank stimulus.
QE-4 , 5 and 6,
My amateur economist opinion is they have been in recession for the last 30 years or so, never came out .
I'm afraid the west is headed for the same fate, if not already there. You just can't expect real growth by off-shoring manufacturing then creating artificial consumer / infrastructure demand with endless central bank stimulus.
QE-4 , 5 and 6,
Japan officially in recession"
My amateur economist opinion is they have been in recession for the last 30 years or so, never came out .
I'm afraid the west is headed for the same fate, if not already there. You just can't expect real growth by off-shoring manufacturing then creating artificial consumer / infrastructure demand with endless central bank stimulus.
+1
My amateur economist opinion is they have been in recession for the last 30 years or so, never came out .
I'm afraid the west is headed for the same fate, if not already there. You just can't expect real growth by off-shoring manufacturing then creating artificial consumer / infrastructure demand with endless central bank stimulus.
+1
eytonxav
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
"Japan officially in recession"
My amateur economist opinion is they have been in recession for the last 30 years or so, never came out .
I'm afraid the west is headed for the same fate, if not already there. You just can't expect real growth by off-shoring manufacturing then creating artificial consumer / infrastructure demand with endless central bank stimulus.
QE-4 , 5 and 6,
+2
Senator
Thinks s/he gets paid by the post
"Japan officially in recession"
My amateur economist opinion is they have been in recession for the last 30 years or so, never came out.
I'm afraid the west is headed for the same fate, if not already there. You just can't expect real growth by off-shoring manufacturing then creating artificial consumer / infrastructure demand with endless central bank stimulus.
QE-4 , 5 and 6,
I have always thought deflation, or recession, was the way we are headed. You cannot keep depressing wages and not suffer from slower spending. There will always be a country to offer labor cheaper. It was Japan, now it is China, soon it may be South America, or Africa.
When people have less money to spend, the economy contracts, and a recession starts. Companies reduce prices to sell more. Or if they have a solid market share, they increase prices, and sell less, but make a higher profit.
In the old days, money velocity was ~6. I went to a restaurant, tipped the server. They in turn, bought a pair of pants at the store. The clothing store had to buy the pants from a manufacturer here in the USA. The manufacturer bought the cotton from a coop, which in turn paid a farmer. The farmer spent the money, and the cycle began again.
Now, I tip the server, he buys a pair of pants, and Wal-Mart (or Target) gets the money and the money goes to China.
And we wonder why printing money has no effect.
Only a severely weaker dollar will create jobs in the USA again, but other countries are printing money faster than we can.
Actually, I wouldn't include the US or the UK, but wouldn't be surprised to see France, Italy and Germany with similar issues. Contracting internal demand is caused by a combination of high debt and declining working age population, which feed into each other. The US, and to a lesser extend the UK, should see a stable or growing labor force over the next few decades. As long as nominal interest rates are below the nominal rate of GDP growth, which is feasible, economic growth is sustainable, the debt can be serviced and the total debt to GDP ratio should decline.
This is a greater issue for surplus countries with poor age demographics, such as Japan, China, Germany.
This is a greater issue for surplus countries with poor age demographics, such as Japan, China, Germany.
Who would have thought that raising sales taxes might actually reduce purchases? Maybe I should apply for a government grant to study this.
If the US increases output per labor hour (productivity) faster than other countries, we can maintain our wage levels even in the face of low wages overseas. There are still a lot of advantages to having a factory in the US (rule of law, stable government, good public infrastructure, literate workforce, etc) that go some distance to offsetting very cheap labor.
The key to increasing labor productivity is usually captial investment (tools/automation) and training. US laws/policies also give US employers a significant advantage over many industrialized countries (try firing a worker in Italy)
And we need to take a look at our tax code--it is not designed to help US employers stay competitive, and does not induce them to keep jobs in the US--quite the opposite.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
This is my view as well. I don't see the US doomed to follow in Japan's footprints.
We may experience slow growth for a while yet, but that is not the same as deflation. And I believe we will start to see some labor shortages that will improve the salary situation for working folks.
And the sending jobs overseas bit is actually starting to see some reverses. The bulk of offshoring jobs may have run its course - overseas labor is not nearly as cheap as it was.
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+1
I would add that the US economy is not going to grow faster by manufacturing cheap pants or providing jobs in lower-skilled sectors. It has successfully moved up in the global value chain, and away from cheap-labor manufacturing to a more dynamic economy with technology and innovation - and that's what drives a sustainable growth and where the US should invest capitals in.
robnplunder
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I have a simple long term formula for predicting recession. Population increase = inflation, population decrease (especially younger generation) = recession.
Applying this formula, US will not go into prolonged recession as long as their population grows (if not by birth rate, do it with immigration). Western Europe will more likely see recessions. Ditto for Japan, Korea. Not so much for China & India. For the world overall, we will have 8 billion people in 10 years. I see growth, and other things that come with it (more environment issues, border conflicts, shortages, ...).
FYI, from wiki, 2012 Japanese population = 128M, 2014 estimate = 126.4M. Either they learn to spend more, or they need to export more.
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http://www.usdebtclock.org/index.html
See if you can find "Money Creation"
and then look at the comparison to the year 2000. (especially currency and credit derivatives)
...and then check out the median income...compared to 2000.
Forbes has an interesting outlook:
http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget-debt-as-a-percent-of-gdp-its-really-much-worse/
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Trend
See if you can find "Money Creation"
and then look at the comparison to the year 2000. (especially currency and credit derivatives)
...and then check out the median income...compared to 2000.
Forbes has an interesting outlook:
http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget-debt-as-a-percent-of-gdp-its-really-much-worse/
...............................
Trend
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Lakewood90712
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With that in mind , Japan will be in recession for the foreseeable future. From what I have observed , the Japanese people in general are thrifty , and savers. The world is awash in excess manufacturing capacity, so they are exporting all they can already. Artificially making the Yen drop will not work , IMO , as the bigger players in asia can do the same to squash them.
The last real growth in Japan was rising from the ashes after WWII , and ending in the early 1980 , then on to insane real estate investments with cheap money that crashed ( sound familiar), and the rise of fierce export competition from Korea,China, and India.
Senator
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It is extremely difficult to compete with disposable workers from low-cost countries. No minimum wage, no child labor laws, no OSHA, No EPA, no Worker's Comp, prison labor, and lots of bribes to look the other way, etc.
A battery plant explosion kills over 3,000 people, no problem. Pay them $1M each and move on.
A mine collapses, no problem. Just fill it in and move on.
Other countries can work for pennies on the dollar compared to the US. If a company wants to hire foreign labor, that's fine, but there should be a tariff to make up for lack of regulations and even the playing field.
As it stands now, we will print enough money to level the costs, which is also fine. So far, printing money has not hurt us at all.
I don't know. But, I have suggested to my son (15 yo) that he be one of the folks either designing or programming the machines.
Lsbcal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
But this chart does not seem to scream trouble for Japan. Could the truth be more complex? I'm not smart enough to get ahead of the stock and foreign exchange markets.
Of course, if there is a long-term excess supply of labor, that increasing productivity might just lead to higher profit margins, not higher wages. Kinda like this--
Economist's View: GDP per Capita versus Median Family Income
Profits At High, Wages At Low - Business Insider
Economist's View: GDP per Capita versus Median Family Income
Profits At High, Wages At Low - Business Insider
Yep, that ol' supply and demand thing.
Imagine how low US wages would have gotten if US worker productivity hadn't been increasing. That's what the charts can't show, but we continue to see them trotted out. We know the labor and goods markets are global. Tarrifs on imported goods? We'll Smoot-Hawley our way to prosperity and full employment just like last time.
The wages of US workers are based on supply and demand, like other commodities. At least in the case of manufacturing (and for many services) long-term there's no effective way to restrict supply (because businesses overseas can do the work, and because workers can come here legally or illegally to do what is left--maintaining that flow seems to be one of the few things both political parties agree upon). So, if supply can't be effectively reduced, then the best route to increased wages for US workers is to improve the demand for that labor. High US worker productivity and a business climate which encourages employers to choose to locate in the US are the two ways to do that. If that demand is reduced (e.g. because US workers aren't seen as being very productive for each hour they work compared to other workers) then we can all guess what will happen to US worker pay.
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Aus_E_Expat
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Japan has been in some sort of recession since the 1990s (or earlier) but every time I go there it never looks like it is in recession. Always new cars, new consumer goods, new construction and infrastructure.
Some cities in the US look like they are in recession - but Japan doesn't look that way, however, the figures say it is.
Japan's problem is its aging population and declining birthrate coupled with a refusal to permit large scale immigration - the economy has to contract as the population contracts.
Some cities in the US look like they are in recession - but Japan doesn't look that way, however, the figures say it is.
Japan's problem is its aging population and declining birthrate coupled with a refusal to permit large scale immigration - the economy has to contract as the population contracts.
ESRwannabe
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I may be bungling my data, but I believe I read not too long ago, that for the average person their purchasing power is actually less now than it was back in 2000...
We may not be in a recession, like Japan, but it appears that for many of us our standard of living has declined.
We may not be in a recession, like Japan, but it appears that for many of us our standard of living has declined.
The problem is that increased productivity can also reduce demand for labor if the demand for goods isn't all that elastic, or the production of a good is limited by another factor of production.
Imagine that the entire fast food industry managed to increase productivity by 100%, so that they could run their restaurants with half as many workers. That isn't going to push the wages of fast food workers up, because there is still plenty of supply for those workers, and the demand for fast food isn't going to double even with lower prices. There are only so many McDonald's double cheeseburgers I can eat, no matter how cheap they are. That increased productivity would actually tend to reduce jobs and wages.
Our imagine that you can farm the US farmland with half as many people (so like three total ). You may have increased demand at lower prices, but at some point you can't make more farmland.
Increased productivity only means higher wages when the economy is at full employment, with plenty of work available for those freed up workers to do. The level of productivity provides an upper bound to wages if you will. Higher productivity is a requirement for higher wages, but not sufficient in and of itself.
Yes, higher productivity can encourage employers to choose the US over another country, but ultimately the number of jobs that could actually amount to is not huge compared to the overall economy. We imported $2.33 trillion of goods in 2013. That's about 14% of our $17 trillion economy. That is still the tail and not the dog, no matter what all the books about globalization say.
Imagine that the entire fast food industry managed to increase productivity by 100%, so that they could run their restaurants with half as many workers. That isn't going to push the wages of fast food workers up, because there is still plenty of supply for those workers, and the demand for fast food isn't going to double even with lower prices. There are only so many McDonald's double cheeseburgers I can eat, no matter how cheap they are. That increased productivity would actually tend to reduce jobs and wages.
Our imagine that you can farm the US farmland with half as many people (so like three total
). You may have increased demand at lower prices, but at some point you can't make more farmland. Increased productivity only means higher wages when the economy is at full employment, with plenty of work available for those freed up workers to do. The level of productivity provides an upper bound to wages if you will. Higher productivity is a requirement for higher wages, but not sufficient in and of itself.
Yes, higher productivity can encourage employers to choose the US over another country, but ultimately the number of jobs that could actually amount to is not huge compared to the overall economy. We imported $2.33 trillion of goods in 2013. That's about 14% of our $17 trillion economy. That is still the tail and not the dog, no matter what all the books about globalization say.
Senator
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Imagine what would happen if all of the minimum wage workers showed up at the polls, and voted for a communist for president? Imagine if they voted a slate of people who confiscated companies, like in Venezuela? Or a $20 minimum wage.
There are plenty of people who would vote like that, and would win, but they do not show up to vote.
The world is run by those who show up.
If we continue to export our dollars, and effectively print enough money to equalize wages, the debt will be solved as well as declining wages. Foreign goods would just be too expensive to import.
There are plenty of people who would vote like that, and would win, but they do not show up to vote.
The world is run by those who show up.
If we continue to export our dollars, and effectively print enough money to equalize wages, the debt will be solved as well as declining wages. Foreign goods would just be too expensive to import.
