Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Japan Falls into Recession

online.wsj.com

Post reply on HN
Print view View original

141–150 of 201 posts

Re: Japan Falls into Recession

#141

Post by adventured »

leot wrote: post #124

Japan is a country with too many people saving too much money. So, one proposal: institute a small yearly wealth tax. Avoids a lot of the problems with inflation-based approaches, and doesn't penalize people nearly as much for having liquid assets.

That's incorrect.

Japan's savings rate has collapsed, and is in dire condition.

Via the WSJ:

http://i.imgur.com/vYsbHWg.jpg

That formerly high savings rate was the only thing that enabled the Japanese government to borrow as much debt as they did.

Now that the Japanese are no longer able to save enough money, the government can't continue to borrow from that source, and accordingly the govt. has been forced to turn to the last measure available: currency debasement.

Re: Japan Falls into Recession

#142

Post by adventured »

techdragon wrote: post #21
tormeh wrote: post #15

Earlier quoted context omitted.

I agree, but QE is not a dumb idea per se, it's just the way that it's done is severely lacking. What you want is inflation, which means you want to increase the amount of money in circulation. A simple way to do that is for the central bank to make money up and give, say, 20000 yen to each citizen every year until deflation went away. This is called a helicopter drop in finance-speak, and seen as very radical. Defla…

Australia did one and it worked wonderfully. We rode out most of the brunt of the impact of the 2008 'GFC' with little disaster. The worst of it for most of us was that getting a home loan got a bit tougher, but really this was more a case of returning to earlier norms than really getting "harder"

To what extent does Australia's tie to the Chinese economy deserve primary credit for Australia weathering the GFC?

Re: Japan Falls into Recession

#143

Post by Xixi »

MLR wrote: post #126
mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

They have 5% unemployment, and, after a quick check, it seems like a similar labour force to population ratio to the UK and US. I'm not an economist, but in their position, what would mass immigration solve?

3.6% unemployment and virtually every store has an "help wanted" sign [1] on its front door. Japan is facing an incredible demographic challenge: Japanese population decline has really started 3 to 5 years ago (depending on the source), and it will be getting worse and worse in the next few decades. It means its internal market is essentially shrinking, which makes a terrible case for large investments.

That said the situation is not terrible for workers. I found a job here even though nobody in the company could even talk with me (my Japanese was really bad at the time). The first few months were interesting, we were just communicating with signs and drawings... Programming skills are few and far between in Osaka.

Conversely I know immigrants who took 5 years to find a job in France, which is in the opposite situation: population up, gdp flat, gdp per capita down.

[1] At shitty wage, as you can imagine...

Re: Japan Falls into Recession

#144

Post by toyg »

wbl wrote: post #101
dimitar wrote: post #70

Earlier quoted context omitted.

* If creditors see that you are trying to monetize debt too quickly, they will demand higher rates. * At some level of inflation, seigniorage revenue will fail to increase. * If the government borrows money in a foreign currency to spend too much, depreciation makes loans harder to repay and there is no seigniorage. * If a government refuses to loose monetary policy while spending too much, it will not be aided by mo…

Creditors can't raise rates on bonds. When you issue a bond, you get paid then, and the creditor gets paid later. They can raise rates on new issuance, but the inflation rate is determined by monetary policy, not so much fiscal policy.

Nation-states are constantly refinancing or issuing new debt, sometimes daily. The pool of potential creditors for this sort of debt is very limited, and will react pretty quickly to changes in almost any area of public policy by shunning your debt if rates are not to their liking. Also, some of this debt is auctioned, with results indicating what the market thinks of proposed rates.

So yeah, in practice creditors can alter rates.

Re: Japan Falls into Recession

#145

Post by justincormack »

forgingahead wrote: post #114
gear54rus wrote: post #61

Earlier quoted context omitted.

What I don't really get is how people on this tech-savvy resource still submit links to sources which go against the very idea of free information. Can't we just look this up somewhere else instead of encouraging this bullshit paywall behavior? Or is the quality of information that different?

The quality is night and day. The BBC has unfortunately lost the plot in recent months (go to their homepage and see how many stories are headlined with quotations), and every other free source needs to pander to the clicks-for-advertisers market, so stories are rushed, content is emotional, and quantity is prized over quality. The WSJ is the last remaining quality paper. They increase their prices every year, but I…

The WSJ is not "the last remaining quality paper". The FT is much better for finance news for a start.

Re: Japan Falls into Recession

#146

Post by justincormack »

hudibras wrote: post #129
ekianjo wrote: post #51

Earlier quoted context omitted.

> Deflation tells consumers not to buy as you wait 6 months and it'll be cheaper. I live in Japan for many years and I have never seen such thing as deflation here. Prices have remained stable for most items or have increased a little bit. The idea that stuff becomes cheaper as you wait is ludicrous in Japan.

No serious economist believes the old wives tale about deflation keeping consumers on the sidelines while they wait to save 1 cent (or yen) on a can of soda next year. But it's got "truthiness" so it keeps getting brought up in these HN discussions.

Yeah, economics has become very political and it doesnt help that the subject is pretty poor anyway in terms of evidence. The HN economics discussions are cringeworthy, just people shoving half understood falsehoods around.

Re: Japan Falls into Recession

#147

Post by bildung »

ekianjo wrote: post #97
azernik wrote: post #92

Earlier quoted context omitted.

> These folks don't believe dropping Yen is the solution as majority of investment by Japanese companies is outside Japan and weaker Yen just reduces that investment, in turn less profit flow back in the country. The more expected result would be a change of investment patterns so that more is invested inside Japan; investments abroad bring back only a relatively small amount of money back into the domestic economy a…

> And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? > This doesn't sound like…

> What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ?

In the context of macro economics, delay in consumer spending actually means just that: They'll spend money later. You fancy a new car, but actually your current one still runs fine? You'll delay your spending and just drive your current car a year longer.

Re: Japan Falls into Recession

#148

Post by lottin »

cturner wrote: post #79
hindsightbias wrote: post #64

Earlier quoted context omitted.

> even thought (sic) some of them might agree that B were right If you have a citation for that, I'd love to read it. But I think cats and dogs will start raining from the sky first. You don't go anywhere if consumers expect prices to remain the same or deflate.

Why is this? Computers get rapidly cheaper for example.

It's a myth propagated by certain economists who believe there is an optimum inflation rate and that this optimumum is around 2%. They also predict a great calamity if inflation falls below zero. In practice, experimental evidence tells us that this theory is complete rubbish.

Re: Japan Falls into Recession

#149

Post by aphexairlines »

techdragon wrote: post #18
mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

Immigration is painfully unlikely due to cultural issues. It's oft suggested by non Japanese people looking at the problem but at least from what I can see, the majority of the Japanese voting public don't want immigration. There's reasons if you want a fun read. Particularly interesting is the history of people of Korean decent who are native Japanese residents for a generation or two.

It's already easy to immigrate to Japan. It takes less than a month to get a work-sponsored visa. Much easier than the US H1B.

Re: Japan Falls into Recession

#150

Post by ekianjo »

bildung wrote: post #147
ekianjo wrote: post #97

Earlier quoted context omitted.

> And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? > This doesn't sound like…

> What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? In the context of macro economics, delay in consumer spending actually means just that: They'll spend money later. You fancy a new car, but actually your current one still runs fine? Yo…

That does not mean it hurts the economy as a whole. Capitalism never predicts that growth should be skyrocketing every single year. When there are reasons for the consumption to decrease, it does and that's when new market opportunities arise for companies to grab new consumers, either by providing more affordable products, competing on features, or providing new payment options to make easier for consumers to scale their purchases.
Post reply on HN