Saturday, August 13, 2011

The Japanification of the West

I've long thought this would happen to the U.S. I remember when Japan was tanking and people made fun of the way they tried to paper over their problems. People here would say, "that will never happen to us, because we deal with our problems, we're capitalists."

Turns out not so much. Just like Japan, we are trying to paper over our issues and there is no political will to tackle the tough stuff. 

Paul Kedrosky

The Japanification of the West continues — high debt, low growth, and low yields — as treasuries plumbed record lows this week. Felix Zulauf weighs in on same in Barron's, saying the following:

Providing liquidity isn't the solution, but if we don't do it the system will break down. Providing growth is a difficult task. I don't know how to do that. Long-term, we have begun the Japanification of the Western World. If we are unable to bite the bullet, our problems will grow bigger. Eventually, after many years, some central banks and governments might lose their nerve and go completely in the wrong direction, ending up like Zimbabwe.

As circumstances would have it, Richard Koo of Nomura has out a new report on Japanification. Here is a residential real estate graph from Koo's report:


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