Japans 20 years!

[findlay234]

Hi all, long time since I posted last. A short stint in afghanistan to deal with.

I have a question regarding the last 20 years of no growth and asset slump in japan. I am trying to conduct some research to find out what asset classes did actually appreciate during that time. Im sure that there would have been growing companies that would have bucked the whole trend and who would have been great investments over the last decade but were there any classes which worked out.

I only ask because this is what I feel the UK is in line for over the next few years, hopefully not 20... I think we may have recovered faster had the 'correction' been allowed to happen, deeper but faster.

Cheers
Fin

 

[FUTEX]

Fin.
the banks first ran out of money in August 2007. In the UK we have had no real growth since then. In fact inflationary adjusted we are down. Thats a four and a half year recession so far as I see it. I know the figures show technically we are not, but I do not believe that is the real measure. So, with further cuts in spending biting and unemployment growing I think no signifant improvement for another 3 years. How scary is that?
I look forward with those who have some Japanese insight will throw some insight into what happens next

 

[Martinghoul]

Taking carry into account, the best asset class in Japan has probably been the JGB (Japanese Govt Bond). An asset class that certainly didn't perform very well has been property. Other than that it's very hard to generalize.

 

[findlay234]

As far as I'm aware, property has dropped massively ~50%? Equities dropped ~70%? plus other local classes.I starting to think that the only way the japanese would have been able to invest for proper appreciation would have been in foreign markets. So maybe the answer for us with a possible 10 years of stagnation coming our way we should be looking to foreign investments...

I guess if youre not talking about investments as such you could still trade foreign exchange as that should continue to move as before on the global market.

cheers

 

[Martinghoul]

Well, again whenever you look at these things, you need to take carry/interest/dividends into account, i.e. consider the total returns. But yes, the Japanese have been investing overseas/punting FX etc. That and buying their government's bonds.

 

[safvan]

Japan needs to sell yen massively by investing in the US, UK and other places of interest and make it cheaper to invest there.

Their currency is just too strong. They should just find newer ways to sell as much yen as possible to reduce its strength. There is no incentive for people to spend their money with deflation.

 

[eminiglobex]

re Japan equities and property were a disaster. As stated above, japan govt bonds did ok.

Things are different now in that it is a global problem. If we are on the cusp of a prechter style deflation then the only asset you want to be in is cash.

I think the more important question with regard to what assets you want to be in is do you think the political classes are going to let the deflation happen and do nothing or are they going to print like crazy and attempt inflate out of the mess?

 

[eminiglobex]

If we are on the cusp of a prechter style deflation then the only asset you want to be in is cash.

speak of the devil, from yesterday
Bear Market Rally? - CNBC

 

[safvan]

The solution for Japan is not that hard. It just needs to stop sitting on the vast sum of cash and start investing massively in poor or developing countries. Start giving out loans in Yen to other nations.

It needs to find newer ways to get rid of Yen. It needs to go ahead and start buying USA and other countries in Europe. Perhaps it can just pay and bail out Europe out of its mess.

My theory is that Japan should find 30 or so countries with central bank interest rates of 7% and above and start massively building their infrastructure by just acquiring their debt.

It could just buy Euros in 100s of billions and you would see their own economy would start a boom though I doubt it would be huge success because they simply do not have the population or the physical area to spur new demand of wealth.

Just find unique ways to depreciate the value of the currency. It should not be too hard.

 

[eminiglobex]

safvan. You think Japan has vast sums of cash? They have huge debts. The imf have estimated 250% gross debt to gdp in the next few years. I know alot of nationals hold the debt, but even the net figure is 130 and rising.

Once the bond vigilantes have finished with Europe, Japan is next on the list

 

[squall321]

whats is too strong? isn't that what the floating currency system was sold on, that is would balance out trade? it only took 20 years so it works (eventually)

the problem is - they can't suck any more jobs out of western economies and export back to them and now the japanese 1% elite are moaning about it.

why does china get criticized, while japan gets sympathy for the same thing?? i suppose because they turned their island into a military base for the usa

 

[squall321]

safvan. You think Japan has vast sums of cash? They have huge debts. The imf have estimated 250% gross debt to gdp in the next few years. I know alot of nationals hold the debt, but even the net figure is 130 and rising.

Once the bond vigilantes have finished with Europe, Japan is next on the list

they have trillion+ in FX reserves

List of countries by foreign exchange reserves

1 People's Republic of China $ 3,201 (Sep 2011)[5]
2 Japan $ 1,138 (Jun 2011)[6]
3 Russia $ 516 (Sep 2011)[7]
4 Saudi Arabia $ 484 (Aug 2011)[8]
5 Republic of China (Taiwan) $ 400 (Aug 2011)[9]
6 Brazil $ 352 (Aug 2011)[10]
7 India $ 320.39 (Nov 4 2011)[11]

so 2nd in the entire world. also there are the 4 bric countries hoarding fx as well hmm. they won't spend it though, everything goes into the hoard while they continue sucking out jobs

 

[eminiglobex]

squall, sure big reserves, but net debt to gdp ratio is what the bond markets are concerned with

 

[eminiglobex]

Japan's demographics are a serious structural problem.

spot on

 

[deadbroke]

Hi all, long time since I posted last. A short stint in afghanistan to deal with.

I have a question regarding the last 20 years of no growth and asset slump in japan. I am trying to conduct some research to find out what asset classes did actually appreciate during that time. Im sure that there would have been growing companies that would have bucked the whole trend and who would have been great investments over the last decade but were there any classes which worked out.

I only ask because this is what I feel the UK is in line for over the next few years, hopefully not 20... I think we may have recovered faster had the 'correction' been allowed to happen, deeper but faster.

Cheers
Fin

Start here for 1990 - 1999

 

[deadbroke]

I look forward with those who have some Japanese insight will throw some insight into what happens next

US is trying to do what Japan did (and did in spades) - stimulus and bailouts galore, but property market collapse then as now, ditto. Print, print print, yeah dream on, Japan been there done that, failed failed failed. Commercial prop in Japan dropped by 87%. But GDP rose causing folk to be hopeful but what they forgot or didn't know is that GDP is not a measure of economic performance - the world was still growing, so Japanese exporters still had customers.

So, how is the US different from Japan? The US is in far far far worse shape than Japan was and is therefore very very very poorly equipped to combat Deflation and that is why the odds of failure NOW are so staggeringly high high high

Japan had a large export sector, the US does not. Japan had a supremely high savings rate going into the Deflationary period, the US had a savings rate of 0%, hehehehe. Japan had a current account surplus, the U.S. a deficit of what might as well be quadrillions, sigh sigh sigh.

 

[deadbroke]

I look forward with those who have some Japanese insight will throw some insight into what happens next

Last but not least, don't forget the important lesson learned from the recent collapse in 2008. Why should we not forget this? Because if we are right about the upcoming DEFLATION onslaught, then BEAR has already told us who the beneficiaries are - and they are just 2 in number ....

US Dollar and Yen. God bless them both, the latter especially because it made deadbroke a very happy fellow for years.

And remember, what were the masses saying about the US dollar? Heck, they buried him several times, called him a reprobate relegated to become toilet paper.

They didn't learn that for weeks and weeks while they were calling his death that he just simply refused to take out the low (Dollar index weekly chart).

continued ....

 

[deadbroke]

I look forward with those who have some Japanese insight will throw some insight into what happens next

If we are right about the upcoming DEFLATION, there is an interesting phenomenon re: the twin towers (dollar and yen)

Dollar appears to have reversed versus yen (USDJPY)

if this is correct, god help the dollar haters for dollar will charge upward like there is no tomorrow and will hammer the yen in the process, something it has not been able to do during the first stage of twin beneficiary status during the 2008 collapse.

 

[bevok]

If so, party at the Japanese Central Bank!

 

[squall321]

what happens next

Tokyo and Beijing Agree on Currency Pact - WSJ.com