Do you know who ELSE was a forum nazi?
Caesar? Cicero? …Brutus!
this economist says[url=]Global Agenda: The Japanese conundrum - The Jerusalem Post] that Japan is in deep,serious trouble because of its aging population.
Old people dont deposit money in banks-they withdraw it .He says that soon Japan will be as bad as Greece.
Sounds reasonable to me. Any comments?
That link just goes to the front page. Try this one.
Yes, Japan is unusual in that its debt is largely self-owed and its government does little on the international stage. And banks do lend money on the basis of their cash reserves. But what happens when old Japanese people withdraw savings? Do they hide the money under their tatamis? No, they do so because they have to spend it. Which would be wonderful in a country that has a depressed economy because that’s a stimulus. Unless the money is spent overseas or the receivers ship it all overseas, it stays internal and will find its way back to the banks. And to the government through higher tax collections. We should all have such problems.
Japan’s aging population has far more implications than that. You need younger workers for huge numbers of reasons. Somebody has to work in all those factories and stores and nursing homes that the elderly will be spending their money in. And paying into government pension funds, since I assume Japan has something the equivalent of social security. Not to mention that the sheer innovation that a country needs to move forward comes from the young, not the old.
Japan’s real problem is its cultural xenophobia. It absolutely needs to open itself to immigrants in the way that the U.S. has. At best it has a generation until the current crop of oldsters die off to make the transition, which will cause social unrest far worse than anything seen in Arizona. And that’s also true of Europe.
In another generation there will be an additional billion people in Africa and South Asia who won’t have opportunity. And Europe and Japan will be unpopulating themselves. People will find a way. In the long term, that will be as significant and uplifting as it has been in the U.S. and just as messy and ugly to live through. Banks are about problem 36 on that scale.
I recall reading too, that a major problem was that Japan’s high rate of saving was a direct result of their severe lack of old age safety nets. They have very poor pensions, and other (government?) support is minimal, so all the old folk have to rely on is their savings. As a result, they have some of the highest savings in the world.
The other problem is that if banks have created their borrowing power through these massive deposits, then the problem into the future in Japan will be that the pool the banks have to lend will be smaller. If Japan does not improve its economy and pay down its debt, then eventually the banks will have no more reserve to lend, and government and consumers will be fighting over a smaller pot - the government’s advantage being reliability ( low risk ?!) and the consumers being willing to pay more. Meanwhile, even withdrawing all that money and recirculating it, GDP will drop as population ages unless the fewer working-age people start making a lot more per capita. Japan needs to arrange to pay it down, or eventually borrow abroad.
Plus, you can argue “what is ‘productive’?” Are 10 times as many people in the old folks home business contributing to the long-term value of the country? Or instead should they need engineers, doctors, plumbers, and assembly workers to produce value? A stable or shrinking demographic is a very different animal. House construction, for example… soon it will be in oversupply. What would a glut of housing look like? 