Perry Glasser


In Business, Economics, Economy, Finance, Personal Finance, Politics, Wall Street on August 8, 2011 at 9:19 am

At the beginning of the 1990s, the Japanese economy was a juggernaut, with the Nikkei Index near 40,000 yen. (Think: Dow Jones Industrial Average). Japan was the 3rd largest economy in the world, behind the US and Germany.

By the year 2000, that was down to 20,000 yen, a 50% loss.

In 2003, it bottomed near 7,000 yen, a loss in about a decade off peak of 80%.

There was a “dead cat bounce” in 2007-08 back to 18,000, but the Nikkei now hovers around 10,000 for the past 3 years–a loss off peak of 75%.

Japan’s unemployment rate is under 5%–in the US it hovers near 10%.

Japanese bonds are rated AA–the same rating the US just received. Japanese interest rates are near zero (go look at your checking account rate and current mortgage rates).

If you were a Japanese citizen you would be unworried–most of your needs in this longest life expectancy country are met by guaranteed pensions. How does that stack up in the US?

You may want to think that stocks and the economy have nothing to do with you, but putting your head in the sand leaves parts of your anatomy exposed to abuse. In the US, social security is under attack as too generous; corporations have moved to 401ks, and our political leaders encourage citizens to invest in IRAs and other investment vehicles.

If the US stock market begins to follow a pattern like Japan’s, and if our political leadership does nothing to reverse our policies that spend humongous revenues on warfare with dubious results for security and no hope of financial compensation, we can look forward to
• 20+ years of misery,
• shrinking wealth with no hope of educating our children,
• probable inability to pay for the healthcare we and our kids will inevitably need, and
• work environments filled with terror where people do not take vacations for fear of being perceived as slackers.

In Japan, they have a word for it: ” karoshi.” People work themselves to death.

Welcome to the new American economy.


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