Japan is having a governance problem. Their government has been making bad decisions and covering up fuck ups for the past 20-25 year now and their culture of respecting people in charge is enabling unprecedented levels of fuckupery. Abeanomics is a slow moving train wreck for Japan and has basically robbed the older generation of much of their savings. For example BOJ owns half of the ETFs in Japan and 1/3 of the bond market. They pushed down yields so low that people basically have to work till they die because there is no way to live off savings without draining them down. So a combination of increased people needing jobs and not much job growth has been bad for japan. Also like us their leaders in government and industry are so damn old that they cant really get their head around the major demographic technological changes that are happening and take any meaningful action to fix problems.
How does Japan's bad decisions over the past few decade's compare to America's bad decisions over the past few decades. I might be reading a bit much into it, but the way that you and kleinbl00 talk about things, from debt and generational differences to government mishandling, it seems like there's a lot of similarities to our situations. Or am I reading things wrong?
I always though the bad decisions were similar enough that a repeat of the Japanese style stagflation would happen state side. In 2009 I bet that the US would experience a Japanese style lack of growth, but I didn't really count on the ability of the FED to prop up the markets the way it did. I think they are kind of running low on Ammo though they the probably still have a few clips left so dont count those guys out when it comes to market distortion. The BOJ is really paving the way in what the markets can live with and is the working trial for what the other federal banks can get away with. They are also the lowest on ammo since they have been making the most drastic manipulation moves. If we start seeing market manipulation action from the BOJ fail in any noticeable way then the end game could be in sight globally. So far though they have shown that markets will accept both 0 and negative interest rates so they are really a working demonstration of how far one can manipulate the economy before investors tell them to pound sand. Fundamentally though the BOJ has created a huge debt bomb that cannot be unraveled using conventional means so Japan may also end up being the first trial country for some sort of eventual debt cleanup event. Its probably either them Italy or Spain. The world seems pretty content keeping Greece on life support but I don't think the European powers could support 2 failed states in the euro-zone for long. Either way I expect someone else will be the test case for what ever method is used to deleverage these nations. There are some fundamental differences with Japan and the Us. Japan is a nation of savers and the US is a debt fueled nation. The USD is a reserve currency status and the US has lesser demographic problems (but still there is a boomer problem). In spite of those differences Japan has kind of served as a model of the economic policy that has happened in the US over the past 7 years so its not surprising that the results are similar. They didn't have a huge market bounce like we did but they had the same wage stagflation coupled with reduced buying problem that we have had here in the US. Their people have suffered as a results and they also had a lost generation.