Author Topic: Could the same thing that happened in Japan happen again in the west.  (Read 6726 times)

techwiz

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I came across something in the latest retirement book I just finished reading.  The author presented some macro economic factors such as the aging population in the western world and pointed to Japan as an example of an economy which has already dealt with this.  He suggested some of the same issues could be repeated in the western world.   

This peaked my interest and I went on to look at the history of the NIKKEI 225 (attached) and noticed it's all time high of 38915 was reached in December of 1989 and even 28 years later it is still only at 19347. 
This lead me to second guess my confidence in one of the basic concepts I put into my investment plan  "over the long run the markets will always go up" http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

I know no one has a crystal ball and can't predict the future ,but I am hoping someone here can explain why I can't compare the performance NIKKEI with what would happen to western markets and how my investment plan assumptions are still sound.

Darn I knew I should have stuck to my New year resolution of a low information diet!

 





 

 




PathtoFIRE

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #1 on: January 31, 2017, 11:55:33 AM »
Dividends...remember if a graph is not presenting total returns including dividends, then it's missing some important info for comparison

tarheeldan

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #2 on: January 31, 2017, 12:04:27 PM »
The lost decade is, I believe, more a case of the deflation trap (and liquidity trap), where expectations are anchored that the price level will fall in future periods. Consumers are then given incentives not to spend now but to spend later, when prices are lower, thereby reducing a large component of GDP. With weaker sales, employers are forced to scale back, reducing personal incomes, and so disposable income is reduced and so on and so forth.

This is why the European Central Bank has been closely watching the HICP and implementing aggressive and novel means of monetary accomodation. Here at home, we have had not only expansionary monetary but expansionary fiscal policy (following the Time of Shedding and Cold Rocks) as well, in order to avoid this outcome. FOMC policy has, and continues to remain, highly accomodative as the Fed hopes to see the Core PCE approach its 2% target over the medium term.

So, yes, but central banks have been working to combat the possibility.

I also agree with PathtoFIRE that dividends should be included in ones assessment of the Nikkei.

ETA: Here's an NBER paper on the importance of monetary policy regarding the situation in Japan (how a failure there is largely to blame):
http://www.nber.org/chapters/c0092.pdf
« Last Edit: January 31, 2017, 12:07:42 PM by tarheeldan »

sailinlight

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #3 on: January 31, 2017, 12:14:57 PM »
Also the Japanese population is aging a lot faster than in the US.  Say what you will about recent events, but we still have a lot of immigration of young people coming into the country adding to the workforce.  Japan doesn't allow that on anywhere near the scale of the US.  Plus, as the other posters mentioned, we see what happened in Japan, so it is accounted for in the policies of the ECB and FOMC (fighting the last war and all that...)

tarheeldan

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #4 on: January 31, 2017, 12:19:18 PM »
we still have a lot of immigration of young people coming into the country adding to the workforce

Great point!

yachi

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #5 on: January 31, 2017, 12:54:31 PM »
I agree it's a very long, slow drop from a highly overheated market
someone here can explain why I can't compare the performance NIKKEI with what would happen to western markets
I think you have to have a run up in prices before you experience the crash.  You have all these companies and real estate that should not have commanded such high prices prior to the crash, and then they're worth a more fair amount after the crash, it's restoring the right balance to the economy.  There has to be a relationship between the market and the underlying assets.

how my investment plan assumptions are still sound.
You didn't mention what these assumptions are.  I would think you're at an OK place for the US market to continue going up or experience a short drawback.  The thing is, if it goes up 40% in the next year or two, that's probably too much and there should be a corresponding crash. 

etselec

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #6 on: January 31, 2017, 01:05:46 PM »
we still have a lot of immigration of young people coming into the country adding to the workforce

Great point!

Though some folks are working hard to make that less true...

techwiz

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #7 on: January 31, 2017, 01:53:15 PM »
http://www.thebubblebubble.com/historic-crashes/
Quote
By the peak of Japan’s Bubble Economy in 1989, a house in Tokyo cost well over $2 million and the land underneath Tokyo’s Imperial Palace was rumored to be worth more than all of the land in California. Japan’s Bubble Economy peaked in late 1989 and the country’s highly-inflated stock and property markets began to crash. By 1992, Japan’s Nikkei stock index plunged to 15,000 from its peak of nearly 40,000 and the country’s real estate markets were decimated along with the rest of the economy. Since 1989, Japan’s Bubble Economy has deflated for over two decades, leading to this era being called the “Lost Decades.”



My 5-second armchair analysis is that "it did happen" to the western markets; the 1999 bubble was similar, and the crash was, as well. The big difference is just scale. It's all "return to mean" and if you compare these two graphs, you can see just how sharply the Nikkei skyrocketed, and how it finally is "basically" in line with where it would have ended up had it stuck to a more organic growth pattern (on the graph you shared.)

Now you have me looking at the Nasdaq and I was surprised to see a 10 years drop from 1972 (759) until 1983. The one in your graph from 2000 (6447) until now (5585) 17 years later and still not at the high from 2000. The DOW had a 30 year drop 1929 (5307)-1959 and the latest one was only 5 years 2007 (16103) until 2013.   I am comfortable with the short term drops (5 years or less) but a 30 year drop would basically ruin most FIRE plans that had a high stock asset allocation.

Pathtofire and others have added some great points about dividends, fiscal policy,  and immigration which should prevent a similar thing from happening again or at least lessen the impact.



   

yachi

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #8 on: January 31, 2017, 02:32:20 PM »

Now you have me looking at the Nasdaq and I was surprised to see a 10 years drop from 1972 (759) until 1983. The one in your graph from 2000 (6447) until now (5585) 17 years later and still not at the high from 2000. The DOW had a 30 year drop 1929 (5307)-1959 and the latest one was only 5 years 2007 (16103) until 2013.   I am comfortable with the short term drops (5 years or less) but a 30 year drop would basically ruin most FIRE plans that had a high stock asset allocation.

Pathtofire and others have added some great points about dividends, fiscal policy,  and immigration which should prevent a similar thing from happening again or at least lessen the impact.


eh.  You likely participated in the preceding run-up.  If it bothers you so much, then wait for a stock market crash to retire.  When investors are fearful of losing money, they're more conservative in their valuation of the markets. 

It's like worrying every night that you're going to wake up with an epic hangover the next morning.  You very well might, but if you did, you experienced a great night of drinking to get there.  No drinking - no hangover.

1929 was preceded by the roaring 20's and a doubling of US wealth from 1920 to 1929.  2000 was preceded by money-for-an-idea-and-a-website dotcom craze that drove prices to insane highs.  These crashes don't happen in a vacuum, which is why I favor calculators like FireCalc that make use of the cause-effect relationship by using actual historical records.

techwiz

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #9 on: February 02, 2017, 11:49:22 AM »
I reread stock series and there was one part that still has me feeling uneasy.   
Quote
Part IV: The Big Ugly Event, Deflation and a bit on Inflation
Lesson #1:  Never buy stocks on margin.

Lesson #2:  If a time comes when you are reading and hearing about people routinely making fortunes in an aggressively rising market using margin, something very, very bad is around the corner.  (Joseph Kennedy is said to have known it was time to exit the market in early 1929 when he started getting stock tips from shoe-shine boys.)

Lesson #3:  If you see Lesson #2 forming it is a good time to take your chips off the table.  Very tough to do when everybody is making “easy” money.

Lesson #4:  Once the crash comes, it is too late.

Is this not timing the market?  What do you do with the money in the mean time....bonds? One of the problems with timing when do you get back in? 

I have been using FireCalc and it proves asset allocation of 100% equity is best mathematically, but I wonder does it account for those "Big Ugly Events"?

I am planning on just staying positive and not let fear make bad decisions. I spent too much time on this doom & gloom I am  just going to stick to my original plan and hope that my diversification will help in case the big ugly event happens. 

Carless

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #10 on: February 02, 2017, 12:49:37 PM »
This is why you diversify.  I have index funds from Canada (in a minority), from the US and from the rest of the world in addition to bonds.  If something blows up with say, gas prices/housing here, the rest of the portfolio will cushion effects on my local holdings.

yachi

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #11 on: February 02, 2017, 01:08:53 PM »
I reread stock series and there was one part that still has me feeling uneasy.   
Quote
Part IV: The Big Ugly Event, Deflation and a bit on Inflation
Lesson #1:  Never buy stocks on margin.

Lesson #2:  If a time comes when you are reading and hearing about people routinely making fortunes in an aggressively rising market using margin, something very, very bad is around the corner.  (Joseph Kennedy is said to have known it was time to exit the market in early 1929 when he started getting stock tips from shoe-shine boys.)

Lesson #3:  If you see Lesson #2 forming it is a good time to take your chips off the table.  Very tough to do when everybody is making “easy” money.

Lesson #4:  Once the crash comes, it is too late.

Is this not timing the market?  What do you do with the money in the mean time....bonds? One of the problems with timing when do you get back in? 

I have been using FireCalc and it proves asset allocation of 100% equity is best mathematically, but I wonder does it account for those "Big Ugly Events"?

I am planning on just staying positive and not let fear make bad decisions. I spent too much time on this doom & gloom I am  just going to stick to my original plan and hope that my diversification will help in case the big ugly event happens.

Stock options (specifically buying Calls) are better than margin because your account can't go negative.  Still, there are dangers to this type of leverage that I don't think is fully appreciated, and they might lead the next crash.  When I start hearing about everyone making money on stock options, I'm out.  By 'out' I mean I'll cash out all the stock options, and buy VTSAX and BRKB in retirement accounts.  I'll cash out taxable accounts and pay off debt.

frugaliknowit

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #12 on: February 02, 2017, 01:57:56 PM »
This is why you diversify.  I have index funds from Canada (in a minority), from the US and from the rest of the world in addition to bonds.  If something blows up with say, gas prices/housing here, the rest of the portfolio will cushion effects on my local holdings.

+1

I reccommend following Paul Merriman (http://paulmerriman.com/), if for no other reason than following his academic research of Buy and Hold Advice (the equity portion of which is 50% U.S./50% non-U.S. for diversification purposes).  His website is a wealth of information and wisdom.
« Last Edit: February 05, 2017, 07:15:56 AM by frugaliknowit »

Goldielocks

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #13 on: February 02, 2017, 04:01:15 PM »
Yes.  Certainly.

This is why so many western countries have high immigration rates, to offset the "Baby Boom" demographic that is aging now, and to get more tax paying workers.

It is not just a stock market thing, but impacted Japan's housing costs, banking rates, import costs, etc.

SwordGuy

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #14 on: February 02, 2017, 07:41:16 PM »
That's one reason why we're diversified in our income streams.

Current income streams, as I expect them to be a few years into retirement, will be about:

16% Absentee Farm income
27% Social Security income
23% Rental income
34% Stock income

The above should provide about 200% of our target income.

I'm expecting to make some additional money from one of:

a) Flipping a house or two for fun and profit.
b) Creating and selling art.
c) Possibly more rental property.
d) Teaching art and craft classes.
e) Writing technical how-to books.
f) Blogging
g) Writing fiction
h) Software development

Or not.   Depending on whether I take up fishing or some other new hobby.

15 months or less to go!!!!!

Metric Mouse

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #15 on: February 02, 2017, 10:12:54 PM »
Also the Japanese population is aging a lot faster than in the US.  Say what you will about recent events, but we still have a lot of immigration of young people coming into the country adding to the workforce.  Japan doesn't allow that on anywhere near the scale of the US.  Plus, as the other posters mentioned, we see what happened in Japan, so it is accounted for in the policies of the ECB and FOMC (fighting the last war and all that...)

Yes, the USA has very positive demographics compared to most of the other western countries. Canada, Germany, Italy and many others are at much greater risk for these factors than the USA is.

Dicey

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #16 on: February 02, 2017, 10:29:34 PM »
Two words keep me sane in the face of things like this, including the 45th president of the US: Diversified Portfolio.

I just pray it's enough.

Edit: typo

Radagast

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #17 on: February 03, 2017, 12:13:06 AM »
You should always expect stocks, especially of a single country, to go nowhere for a decade or two. Global diversification and long term bonds help reduce the odds of this. That being said, Japan is exceptional and you should be able to see something like that coming from a long way away. Here are a few signs, when the total market has
Dividend yield under 1%
Price/Earnings ratio over 50
Price/Book ratio above 5
or thereabouts you should be concerned.

techwiz

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #18 on: February 03, 2017, 02:54:36 PM »
Quote
You should always expect stocks, especially of a single country, to go nowhere for a decade or two.
This is the type of stuff I am trying to avoid with my information diet!
FUD (Fear, Uncertainly, Doubt)
Quote
Here are a few signs, when the total market has
Dividend yield under 1%
Price/Earnings ratio over 50
Price/Book ratio above 5
or thereabouts you should be concerned.

I went with the couch potato index investing to make it easy, I was hoping not to have to put in effort to track warnings signs on markets. 

I don't have the diverse income streams that SwordGuy has.  My Diversified Portfolio of 100% equity is not that diversified country wise. It is really heavy on two countries (US and Canada) and in reality if the US market drops Canada's will follow.

Canadian Equity (VCN)      30%   
Total US Equity (VUN/VUS)50%   
Total International Equity (VIU/VEE)20%   

The more this fear creeps in the further out my FIRE plans end up. 

Radagast

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #19 on: February 03, 2017, 09:34:57 PM »
This is the type of stuff I am trying to avoid with my information diet!
FUD (Fear, Uncertainly, Doubt)
I went with the couch potato index investing to make it easy, I was hoping not to have to put in effort to track warnings signs on markets. 
The more this fear creeps in the further out my FIRE plans end up.
Oh my bad. I actually thought that was reassuring. However, if there is ever a real bubble you will feel the heat of the euphoria from 10,000 miles away. You may wish to lighten up on US stocks (as you say, Canada may be more correlated to them) and add in a bond fund to ease your concerns.
30% VCN
20% VIU
10% VUN
10% VUS
10% VEE
20% VAB
will give you better diversification, or something along those lines. I looked at VAB for the first time and it is pretty decent, IMO, likely better than the US total bond fund. It looks like 80% of it is issued by various Canadian government entities. It is also in a pretty sweet spot duration-wise. It should hold up well during a deflationary crisis such as US 2008-9 or Japan 1989-present.

MightyAl

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #20 on: February 03, 2017, 10:05:40 PM »
Does Japan still have the 100 year mortgages that are consigned by your kids?  I read that a few years ago but wasn't sure it it is still a thing. Japan is a worst case scenario of stagflation. I loved it when the exchange rate was crazy favorable, I bought car parts by the container and tripled my money.

Metric Mouse

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #21 on: February 03, 2017, 10:10:40 PM »
I loved it when the exchange rate was crazy favorable, I bought car parts by the container and tripled my money.
Really? That's quite unique.  Did you sell them eBay style or did you unload them on repair shops and dealerships?

ChpBstrd

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #22 on: February 04, 2017, 08:22:57 PM »
It would be naive to think what happened to Japan and what happened to the U.S. in the past could not happen to the U.S. in the future. The Japan situation, the US Great Depression, and the stagflation of the 70's to early 80's were all a result of government policy errors.

Think about contemporary explanations about why it won't happen:

1) demographics (uh, baby boomer generation selling stocks to retire? The U.S. is aging.)
2) immigration (uh, have you heard about the election?)
3) world trade (ditto)
4) better governance and financial management systems (until Head Cheeto "ends the fed", deregulates the banks, and blackmails businesses like Ford)

This is a good reason to diversity: Asia, Australia, India, Brazil, Europe, Latin America, REITs, MLPs, etc! It's an even better reason to live as frugally as possible, to save enough to weather the periodic storms. It's NOT a good reason to buy 2% bonds.

Metric Mouse

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #23 on: February 07, 2017, 02:07:55 AM »
It would be naive to think what happened to Japan and what happened to the U.S. in the past could not happen to the U.S. in the future. The Japan situation, the US Great Depression, and the stagflation of the 70's to early 80's were all a result of government policy errors.

Think about contemporary explanations about why it won't happen:

1) demographics (uh, baby boomer generation selling stocks to retire? The U.S. is aging.)
2) immigration (uh, have you heard about the election?)
3) world trade (ditto)
4) better governance and financial management systems (until Head Cheeto "ends the fed", deregulates the banks, and blackmails businesses like Ford)

This is a good reason to diversity: Asia, Australia, India, Brazil, Europe, Latin America, REITs, MLPs, etc! It's an even better reason to live as frugally as possible, to save enough to weather the periodic storms. It's NOT a good reason to buy 2% bonds.
If one were truly worried about demographics, one would be much more inclined to invest IN America than OUTSIDE of it, imo.

 

Goldielocks

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #24 on: February 08, 2017, 07:51:45 PM »
YEs, this certainly helps to explain one reason for Germany's willingness to bring in economic and war refugees.


Metric Mouse

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #25 on: February 10, 2017, 07:34:42 PM »
YEs, this certainly helps to explain one reason for Germany's willingness to bring in economic and war refugees.
Good point. If they don't, they'll have a hard time financially supporting the rest of the European union when their set of 'boomers' retire and begin drawing pensions.

aschmidt2930

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #26 on: February 10, 2017, 08:13:25 PM »
Despite our recent political choices, the US still brings in more young immigrants than most of the world.  Comparing Japan of the past to the US of today is a stretch.  The US actually has one of the best demographic trends of developed countries.

Metric Mouse

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #27 on: February 10, 2017, 08:17:38 PM »
Despite our recent political choices, the US still brings in more young immigrants than most of the world.  Comparing Japan of the past to the US of today is a stretch.  The US actually has one of the best demographic trends of developed countries.
Yes, yes we do. :D 'Murica!

ChpBstrd

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #28 on: February 11, 2017, 10:37:24 AM »
The demographic stats are proxies for another assumed variable: consumption per capita. It is assumed that people in their 20s-30s consume at a higher rate than 70 year olds, and that this cycle of work and consumption drives GDP.

So the relevant question behind the question is which societies have peaked in terms of consumption. Will or can millenials out-consume their parents?

Case

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #29 on: February 12, 2017, 10:54:13 AM »
You should always expect stocks, especially of a single country, to go nowhere for a decade or two. Global diversification and long term bonds help reduce the odds of this. That being said, Japan is exceptional and you should be able to see something like that coming from a long way away. Here are a few signs, when the total market has
Dividend yield under 1%
Price/Earnings ratio over 50
Price/Book ratio above 5
or thereabouts you should be concerned.

If could have been seen a long time coming in advance, than how come it ended up being a disaster?

JAYSLOL

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #30 on: February 12, 2017, 12:09:02 PM »
These charts seem to show that Canada has a more extreme "population age wave"  than the US does.  It'll be interesting to see how this plays out over the next 15 or 20 years, especially with the housing market the way it is here in Canada. 


Metric Mouse

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #31 on: February 13, 2017, 02:36:05 AM »
These charts seem to show that Canada has a more extreme "population age wave"  than the US does.  It'll be interesting to see how this plays out over the next 15 or 20 years, especially with the housing market the way it is here in Canada.
Yes, Canada could be in for a rough decade or two demographically.

Schaefer Light

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #32 on: February 15, 2017, 10:45:58 AM »
It would be naive to think what happened to Japan and what happened to the U.S. in the past could not happen to the U.S. in the future. The Japan situation, the US Great Depression, and the stagflation of the 70's to early 80's were all a result of government policy errors.

Think about contemporary explanations about why it won't happen:

1) demographics (uh, baby boomer generation selling stocks to retire? The U.S. is aging.)
2) immigration (uh, have you heard about the election?)
3) world trade (ditto)
4) better governance and financial management systems (until Head Cheeto "ends the fed", deregulates the banks, and blackmails businesses like Ford)

This is a good reason to diversity: Asia, Australia, India, Brazil, Europe, Latin America, REITs, MLPs, etc! It's an even better reason to live as frugally as possible, to save enough to weather the periodic storms. It's NOT a good reason to buy 2% bonds.

I agree that government policy errors were largely to blame for the situations you mentioned, but ending the fed would be a good way to prevent those same types of errors from happening again.

Cowardly Toaster

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #33 on: February 15, 2017, 11:02:39 AM »
Let's not be so afraid of economic speed bumps that we feel the need to open up to too many immigrants.

Japan will probably have an economy the deflates with the population, and then a new crop of young folks will come along and a baby boom will happen. The same could happen here, but the economic leaders of our country have decided that our economy must never have setback, even though that can be healthy sometimes.

aceyou

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #34 on: February 15, 2017, 12:21:54 PM »
Anything can happen, so yes. 

However, probably not likely.  Japan is a small island with lots of missing natural resources that are super helpful to continue to explode in 21st century planet earth.  The US has a lot more of those things and we are far from optimized. 

Schaefer Light

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #35 on: February 15, 2017, 12:55:02 PM »
The same could happen here, but the economic leaders of our country have decided that our economy must never have setback, even though that can be healthy sometimes.

That is our biggest problem, and the one that will likely cause us the most harm.  Our leaders don't seem to understand that keeping interest rates "artificially" low (and by this I mean lower than they would be in the absence of government intervention) is harmful for the economy and creates bubbles that will eventually burst.

Goldielocks

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #36 on: February 19, 2017, 12:31:50 PM »
These charts seem to show that Canada has a more extreme "population age wave"  than the US does.  It'll be interesting to see how this plays out over the next 15 or 20 years, especially with the housing market the way it is here in Canada.

Partly the immigration policy has worked to modify the extremes noted in demographics on the 1982 line.   The large bump of baby boomers created a modifying echo population, too.   It will be interesting, to watch.

Hargrove

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Re: Could the same thing that happened in Japan happen again in the west.
« Reply #37 on: February 19, 2017, 01:32:44 PM »
Japan is extremely different from the US. If you're looking for "the 4% rule can be applied safely to all things forever," the answer is of course not. To your situation? The answer is probably.

However, Japan is not particularly welcoming of immigrants, who are a huge source of energy in the US economy.

Japan is having very few children. The US still isn't even sure how it feels about the birth control it invented.

Japan's territory and natural resources are finite and may be more finite with climate change. The US is in a better position and has much more land.

Japan's culture has become very pro-saving. The US obviously doesn't have this feature.

Japan's culture is not pro-invention. They tend to perfect goods and processes that others invented, but their ability to do that cheaply was weakened as they reaped the rewards and raised standards of living. Inventors, however, often are so averse to receiving credit that they lie about it entirely or try to get others to claim inventions for them when faced with the press. Meanwhile, the US has Kanye, who hasn't invented anything, and wants credit for all the things. We also have Google, Amazon, Facebook, Microsoft, IBM...

Japan has housing rules that actually make it cost-effective to let a house rot than to do anything with the space it occupies (a loophole not understood when they first made development incentives that greatly favor "a thing built on a spot" vs "an open spot," which has exacerbated urban blight and housing values.

Inventors' capacity to create wealth is also not an immediate export requirement - your new and old inventions can make money all over the place. Frozen potato flakes are still pretty respected in places like Nigeria for preventing waste, and they're "newer," so to speak. Elsewhere, like Algeria, technology might be upgraded overnight with new cellphones, skipping the landline step entirely. An awful lot of global development helps American companies. I love to point out to people complaining about apple pickers sending money home at $2 an hour and "draining" the economy that the Wal Mart in Argentina is sending a lot more back.