Japan: a warning from history

ruggedtoast

crazygaijin wrote: »

Here in Japan (yes I live here as my name suggests) if you dont pay your debts you have a visit from the Yakuza and you have to sell a kidney or something.

The atitude of Dan which is so selfish is what will make our crash much worse.

Dont forget property fell up to 80% here and it wasnt an option to just give the keys back and default on your mortgage. Imagine how you would feel paying it off over your working life to know its only worth 20% now?

Thats not really correct. Overall falls were dramatic but have to be taken in the context of decades of gradual decline offset against a deflationary environment.

Once built a property will lose a substantial amount of its value very quickly. Building standards are low and most buyers are obsessed by getting a brand new apartment (old is 5 years plus) . Historically in blocks of flats this has been achieved by residents groups contracting a developer, who rebuilds the complex (a bit higher) with extra apartments, the sale of which funds the redevelopment. The government typically underwrites the risk.

This business model is not particularly sustainable if you have a declining population..

The market isn’t traditionally the same as the UK as the bricks and mortar are seen as a liability not an asset. It’s the value of the land or the potential for redevelopment that holds your equity.

Yakuza loan companies do indeed have high street outlets staffed by smiling ladies, advertise on tv with cute little dogs, will charge you 347% APR and are quite happy to send people to break your legs if you don’t pay up.

No one uses these for mortgages however. It’s the same banks. Most people end up paying the mortgage and not defaulting because, world wide, that’s what most people do. People (especially people who consider themselves middle class) will go to extraordinary hard ship not to default on their debts, even if there is really no point.

Japan is no different.

penguine

vivatifosi wrote: »

article:
http://news.bbc.co.uk/2/hi/programmes/world_news_america/7951800.stm

Thanks for the link, that was a really interesting article. Very sobering reading.

The decline of recent months has felt like a particularly cruel punch in the stomach.

The country had already paid for its past irrational exuberance.

It had been wearing the hair-shirt of abstinence for most of the 90s.

There were no sub-prime loans here. Credit card debt is virtually unknown in a culture that still clings to crisp bills of cash.

The Japanese had been scrimping and saving for years. With interests rates at zero they had been stuffing money under beds and into safes.

I came here in 1998 to do a story about the brisk trade in household safes, because no one really trusted the banks to look after their money.

Ironically, Japan has been punished because it is good at producing things like cars, computers and cameras that other countries want to buy, or rather wanted to buy.

Exports are down a staggering 47% on last year, which is devastating for an economy that relies on them.

ruggedtoast

vivatifosi wrote: »

I was recently watching an article on the BBC news about the current recession in Japan. It showed how internet cafes were renting out private booths and people had turned them into their homes. Literally a desk width, no window, but a curtain across the front for privacy. I sincerely hope we don't follow that route too. Crazygaijin, please tell me it isn't true!

clip:
http://news.bbc.co.uk/1/hi/programmes/world_news_america/7953376.stm

article:
http://news.bbc.co.uk/2/hi/programmes/world_news_america/7951800.stm

I would take this kind of stuff with a bucket load of salt. Japan is the 2nd biggest economy in the world and pretty much looks sounds and feels like it in 99.9% of places you will visit.

There are parts of the UK I have been to that would be considered grim in a developing country.

Japan's main problem is that there is little sympathy for people who are out of work or cant cope with the brutally unforgiving social system they have. Apart from family there isnt much social net after your 6 months of dole have run out, and people despise the homeless.

Dan:_4

Walletwatch wrote: »

I am sorry, but that must be the most daft quote I've had from Dan, whose posts are normally sensible and a balancing factor to the majority of the bearish posters among us, me being one of them. If you were to find yourself in negative equity, even if your house were to get repo-ed, you'd still owe the deficit to the bank, so pray how would you manage to rent somewhere bigger?

Yes I know all that. My post was just a wind-up really as im fed up with "but prices fell 80% in Japan and everyone was financialy finished" quotes.

Dan:_4

crazygaijin wrote: »

Here in Japan (yes I live here as my name suggests) if you dont pay your debts you have a visit from the Yakuza and you have to sell a kidney or something.

The atitude of Dan which is so selfish is what will make our crash much worse.

Dont forget property fell up to 80% here and it wasnt an option to just give the keys back and default on your mortgage. Imagine how you would feel paying it off over your working life to know its only worth 20% now?

What do you mean Dan is selfish. Dan happens to be the most unselfish bloke your ever likley to meet. It's not my fault that the UK laws allow you get repo'ed and go bankrupt and then give you a chance to start over.

JonnyBravo

kennyboy66 wrote: »

But in recent other posts you say that you claim Job Seekers Allowance & Housing Benefit and live in London.

I doubt you could even point out Japan on a map.

:rotfl:

Great spot kenny.

I guess he's had a bit too much of the saki.

Here are just two posts which raise a few eyebrows....

crazygaijin wrote: »

I am just turning 65 soon my wife is only 60, is my allowance about 9k total for both of us or each?

I will start getting state pension soon and a small other pension less than state. I also will have about 200 per week profit coming in from rental properties.

Will I have to pay 20% tax on the profit over my allowance?

crazygaijin wrote: »

My wife and I have a 1 year old and its looking like I may be losing my job after more than a decade. Company going bankrupt.

We are renting a small 3 bed house, so if I do have to apply for JSA will I be able to apply for LHA as well? I am told I only qualify for a 2 bedroom house, does it matter that we live in a 3 bed? Will I just receive less LHA, or will we have to move to a smaller place?

Also I was the only breadwiner, my wife is a full time mum/housewife. If I sign on, does my wife have sign on as well with a 1year old?

One other question, I havent paid enough NI contributions and have no money or anything. Could someone tell me what my family may be entitled to? What would be the JSA for a family like mine to live on?

I have never claimed a penny (apart from TC) I have worked straight from school and am a bit scared about the global crisis.

Thanks in advance for any helpful posts

I'm sure it's all genuine..... he just started the family late, very late, after moving from Tokyo to here and then getting a house and renting it out before claiming job seekers allowance and then retiring and then moving back to Japan where he had to sell a kidney. :rolleyes:

ruggedtoast

Thats a full life indeed.

vivatifosi

ruggedtoast wrote: »

Japan's main problem is that there is little sympathy for people who are out of work or cant cope with the brutally unforgiving social system they have. Apart from family there isnt much social net after your 6 months of dole have run out, and people despise the homeless.

Thanks rugged, I get your point about parts of the UK but was surprised to see people living like this in Tokyo. What I didn't know is how the social system worked there and that's a useful summary.

Thanks too to Kenny and Jonny for pointing out the inconsistencies, didn't pick up on those.

Jonbvn

JonnyBravo wrote: »

I'm sure it's all genuine..... he just started the family late, very late, after moving from Tokyo to here and then getting a house and renting it out before claiming job seekers allowance and then retiring and then moving back to Japan where he had to sell a kidney.

Priceless!:p

Spiv_2

Cannon_Fodder wrote: »

...instead of the high indebtedness that we have, which will delay recovery..

Sorry - how can they have mortgage multiples greater than the UK and be considered to be "less indebted".? Pointless having tons of savings if you have tons of debt! Mortgages are debt.