Standard & Poor’s Cuts Japan’s Debt Rating

Generali

michaels wrote: »

* And interestingly enough the name (although not Mrs) of one the Japanese girls I have gone out with.

Surely the demographics are the big story - surely there must come a point where an ageing population stops trying to save collectively and starts trying to live of those savings?

The money has to be parked in an asset of some sort. JGBs and post office savings accounts are seen as the lowest risk investments.

My theory is that the Japanese stock market and housing market have fallen so far is that as people have aged they've (correctly) tried to sell down risky assets and get into low risk assets that provide an income.

That's why I describe myself as a secular bear on UK house prices as I think the same thing will happen in the UK. People have been promised pensions that the money simply isn't there for. Some of those promises have been made by the Government and others by private companies but the money and tax revenues aren't there to make good on the promises.

When the pension isn't what was hoped for, the biggest asset will have to go. For many people that's the house. Why starve in a £250,000 house (a pretty modest place in much of SE England) when you could move 100 miles across the other side of the English Channel and buy something little and very nice for £100,000 and put £150,000 tax free in your back pocket?

PS I have never slept with anyone called Miss Watanabe, Joe Bloggs or Joe Schmoe.

Jonbvn

StevieJ wrote: »

I would suggest that the Japan problem stems from their xenophobic attitude to immigration and falling birth rates......

Having worked for a large keiretsu in Japan I wouldn't disagree about their xenophobia. They are getting what they deserve.:money:

purch

Having worked for a large keiretsu in Japan

Having worked for a large Japanese Bank in London (only a short time, hated every moment) I can vouch that most of the Japs in the office will be fast asleep around now.

StevieJ

Generali wrote: »

The money has to be parked in an asset of some sort. JGBs and post office savings accounts are seen as the lowest risk investments.

My theory is that the Japanese stock market and housing market have fallen so far is that as people have aged they've (correctly) tried to sell down risky assets and get into low risk assets that provide an income.

That's why I describe myself as a secular bear on UK house prices as I think the same thing will happen in the UK. People have been promised pensions that the money simply isn't there for. Some of those promises have been made by the Government and others by private companies but the money and tax revenues aren't there to make good on the promises.

When the pension isn't what was hoped for, the biggest asset will have to go. For many people that's the house. Why starve in a £250,000 house (a pretty modest place in much of SE England) when you could move 100 miles across the other side of the English Channel and buy something little and very nice for £100,000 and put £150,000 tax free in your back pocket?

PS I have never slept with anyone called Miss Watanabe, Joe Bloggs or Joe Schmoe.

Why do you have to go over the English channel to do that?

setmefree2

Generali wrote: »

Why starve in a £250,000 house (a pretty modest place in much of SE England) when you could move 100 miles across the other side of the English Channel and buy something little and very nice for £100,000 and put £150,000 tax free in your back pocket?

There is no amount of money that would make me move across the channel... or out of London frankly..

nearlynew

S&P and all the other rating agencies are liars and thieves and not to be trusted.

And they are as responsible as anyone for the mess we are now in.

michaels

Trust you to lower the tone (your loss btw)

Whilst I agree with you that in theory there should be a defined 'savings/borrowing' lifecycle for individuals and that on a macro level with an aging population this would imply some periods of excess savings and others of excess consumption I think there is also a fallacy of aggregation that collectively a society can defer consumption, most goods are ultimately perishable so unless there is continual generational replacemnent then it is not possible for everyone to save for retirement. (Hence why I can see the Japanese attempting to become net sellers of Govt bonds as the population ages thus causing the Japanese govt a funding problem)

Thus the only question then becomes how the political institutions of the day share the output between those working and those who have retired. As we are already witnessing those 'promises' can be quickly reneged upon by increasing the retirement age changing the inflation index etc.

For the UK you suggest a similar scenario as with the Japanese bonds - an excess of supply over demand as the retired try to cash in their assets will lead to a fall in prices.

Generali wrote: »

The money has to be parked in an asset of some sort. JGBs and post office savings accounts are seen as the lowest risk investments.

My theory is that the Japanese stock market and housing market have fallen so far is that as people have aged they've (correctly) tried to sell down risky assets and get into low risk assets that provide an income.

That's why I describe myself as a secular bear on UK house prices as I think the same thing will happen in the UK. People have been promised pensions that the money simply isn't there for. Some of those promises have been made by the Government and others by private companies but the money and tax revenues aren't there to make good on the promises.

When the pension isn't what was hoped for, the biggest asset will have to go. For many people that's the house. Why starve in a £250,000 house (a pretty modest place in much of SE England) when you could move 100 miles across the other side of the English Channel and buy something little and very nice for £100,000 and put £150,000 tax free in your back pocket?

PS I have never slept with anyone called Miss Watanabe, Joe Bloggs or Joe Schmoe.

Generali

StevieJ wrote: »

Why do you have to go over the English channel to do that?

You don't have to, it's just that one of the cheapest parts of France for property happens to be the bit nearest SE England.

StevieJ

Now that is serious :eek:

The Japanese have stopped replacing themselves. The average woman has just 1.27 babies, and the number is falling. It ranks 184 out of 195 countries in the UN fertility ranking table.
The country seems to be going off sexual reproduction altogether. In a recent government survey, an incredible one in three Japanese males aged between 16 and 19 said they weren't interested in sex, or were actively averse.

http://www.fool.co.uk/news/investing/2011/01/28/japan-is-dying.aspx

Mr_Mumble

There's been a strong androgynous streak in Japanese teenagers for at least the past two decades. Perhaps it's the natural defense mechanism for Japanese virgins, can't get any so say they're not interested!

I find Japanese culture absolutely fascinating and frankly would prefer a world of slightly xenophobic folk full of differences than a homogeneous gloop of monoculturalism (which most 'multiculturalists' seem to promote).

The Japanese didn't suddenly develop this xenophobia in 1990 - so its hardly a reason for the economy's collapse. A key reason for Japan's rise was its adoption of American management techniques ignored by Americans. If you want a reason for Japan's debt problem, it's simple: two decades of failed government stimulus given to us by Keynesian theory.