From the little research I have done and from what I have been able to find online the problem with what Japan did during it's crisis was 1) acting too slowly and 2)propping up the markets for too long, and they suffered a much longer downturn because of it. Some people say had Japan just let things fail and went into a recession/depression sooner they would have recovered quicker. I fear we are going to do the same thing Japan did by trying to prop-up the markets for too long and when the recession/depression happens it will be much worse and last longer than it would have otherwise been.
They don't have the same mark-to-market rules as we do and their govt collaborated in allowing weak banks to continue operating. The culture in many ways likes to sweep problems under the rug and dispose of them quietly and slowly. That said, they did face more than a decade of asset deflation, especially in housing which lost over 70% of its value from the peak.
The big difference however and one important distinction is that the Japanese save like crazy...which allowed them to fund their trade deficits internally from savings as opposed to the U.S. which can't save a dime and borrows everything. I'd argue they are better off then we will be if this turns really ugly.
The big difference however and one important distinction is that the Japanese save like crazy...which allowed them to fund their trade deficits internally from savings as opposed to the U.S. which can't save a dime and borrows everything. I'd argue they are better off then we will be if this turns really ugly.
First
Lifer
- Jun 3, 2002
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A lot of economists now think it was actually a liquidity trap, where Japan essentially lacked any monetary control to influence market fluctuations among Japanese consumers. Essentially they lowered their key interest rates but it didn't stimulate spending, so their bank kept lowering their rates until they reached basically 0%, at which point they still couldn't bring themselves out of their economic doldrums. This is exacerbated by the fact that Japan isn't as open to foreign trade and labor mobility as many other global economies are, and the fact that Japanese consumers don't spend and borrow at high rates to begin with, throwing Japan into a triple whammy of trouble; low domestic consumption, no serious exporting business, and no monetary bank stimulus available.
First
Lifer
- Jun 3, 2002
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I dunno, I'd argue otherwise considering Japan was essentially in a decade-long recession due to entrenched deflation that they had no way to stimulate themselves out of. That's why small annual inflation and trade deficits are believed by many economists to be the superior alternative to a deflationary environment where everyone is a high saver.
Has anyone actually seen food prices drop this year? All I have seen so far are increasing prices and/or smaller packaging.
Not sure. I've seen my local Stop and Shop drop prices in the last couple weeks, Target as well. I think my wife said Costco had dropped too, I'd have to ask.
I truly believe LK is on drugs
Nothing has dropped here except gas in New jersey has come down to around $3 a gallon.
It's still over $3.50 on the New York side.
Milk still the same around $3.69 so gas just came back down below milk.
Cereal prices are insane as well as most prices in Stop & Shop and the rest of the Supermarkets around here.
LK is lying, period
<HACK> <HACK>
If you don't even have the knowledge to tell *COFFERS* from *CAUGHERS* I don't think anybody should depend on you for economic and financial prognostications.
Pliablemoose
Lifer
- Oct 11, 1999
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LK, the only thing I can find about investing during a deflationary period suggests t bills. And they suggest everything (equities commodities) takes a massive dump.
opinions?
opinions?
I haven't noticed it (I don't shop), but all the signs are saying it's coming. Most of the factories in China are working at ~30% capacity. They usually run 70%.
I haven't thought it through yet, but is there any difference in how major recessions work in industrial, vs. post-industrial (service-based) economies? What about when the cost of reproduction of the good (DVDs, CDs [software]) is next to zero?
GUYS! LK said we are FACING deflation. Not "it's here" but we are FACING deflation. JEEZ. Learn your engrish!
Pliablemoose
Lifer
- Oct 11, 1999
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Engineer
Elite Member
- Oct 9, 1999
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Not sure. I've seen my local Stop and Shop drop prices in the last couple weeks, Target as well. I think my wife said Costco had dropped too, I'd have to ask.[/quote]
If you catch sales, you might not notice as much, but I do 90% of the grocery shopping and while a few things have indeed dropped (milk, eggs), many have went through the roof. Pop (soda or cola for you city slickers) has went up including store brands, bread up, veggies up, meat was up severly but has backed down just a tad, items like spagatti sauce up sharply while cheeses are down just a tad. Overall, it's up but if you buy "on sale" items, you might not notice as much.
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