

Why Japan Is Doomed - startuprules
http://www.oftwominds.com/blogaug10/Japan-doomed07-10.html

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w1ntermute
Here, I'll turn on the Patio11 signal:

    
    
          00000
         0000000
        000P11000
         0000000
          00000

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patio11
I love you guys, but a) it is 4:50 in the morning and I am scarcely coherent
and b) there are several dozen HNers in Japan.

~~~
Groxx
Do they have signals? Do their signals work so effectively (4:50? Yoiks)?

I think we need a signal-tweet-feed, so someone can set up an alarm system for
when their signal is activated. For great justice!

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NathanKP
The original article title is "Why Japan is Doomed (and the U.S. and the E.U.
too)". The Greek debt crises seems to be looming in the future for Japan, the
U.S., and the E.U. as well. There doesn't seem to be very many serious plans
to stop the accruing debt, and those who think that the debt is no problem are
addressed in the article:

 _Those in denial about Japan's reliance on ballooning debt to fund its status
quo (and on America's exact same reliance) basically claim that "It can't
happen because it hasn't happened."_

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dRother
If the US, EU, and Japan are doomed, who isn't? I don't think the answer is
China and India. China's plan seems to be to lurch full steam ahead (no pun
intended) into our style of entirely non-sustainable petroleum and coal fueled
over-consumption.

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drtse4
Will someone be able to exploit this for profit? I haven't enough macro-
economy knowledge to evaluate this, but looks likely. Sadly, i haven't seen
yet any article on future scenarios in case of a global crisis caused by
multiple nations going to default... any interesting link about this will be
highly appreciated.

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arethuza
Credit Default Swaps could be purchased on the relevant sovereign debt.

Given the success that various hedge funds had with this strategy during the
crash of mortgage backed CDOs a couple of years back I would have thought that
there must be a lot of speculation of this kind going on.

Assuming that there are still sellers of CDSs out there...

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carsongross
And remember: timing is everything. Japan has been obviously f __ked for a
long, long time now, but hasn't paid much of a price for it in the bond
market. Now that they are going to have to finance their debt externally,
maybe reality will assert itself.

But maybe not.

Cheers, Carson

~~~
d2viant
You're exactly right, many people have lost a lot of money trying to bet
against the Japanese debt situation.

"Markets can remain irrational longer than you can remain solvent." -Keynes

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stretchwithme
We're borrowing 43% of our budget? Talk about unsustainable.

I would seriously make plans for when the US is forced to stop this
destructive pattern. Its going to be ugly.

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caf
The US is in a somewhat unique position - as the de facto reserve currency, it
can inflate its debts away.

Like Monopoly's "Get Out Of Jail Free" it's a card you can only play once,
though.

~~~
Ardit20
Am sure Japan can do that also since they have their own currency and can
print plenty of money.

One person mentioned some numbers however, such as 2500 Yuan per hour. I am
sure that figure one day was 25 Youan, but inflate and inflate, some zeros
have been added.

I guess however having prices go up also, such that say bread is 1000 Yuan you
do not get real inflation if you print slowly. But, I doubt anyone want to
take a chance.

I would think also that it is not so easy and it is not really a get out of
jail card. Money have value as long as they have power. They can print as much
as they like, as it seems to be the case with Japan, but if prices go up
accordingly, they would need to print more, and prices go up and print more
and Germany 1930s or Zimbabwe 2007.

Paying off debt is a good policy, whether be it a country or individual.
Saving is a good policy too.

~~~
gaius
The US can inflate ultimately because the USD is what oil and other major
commodities is traded in. Anyone who needs to convert their currency into
another to trade doesn't have that luxury. Not even the CHF, the EUR or the
GBP.

~~~
Ardit20
What they can't just start trading in Euro? Do they have some sort of contract
or is there some sort of law which says you can trade oil only in dollars?

I think if the dollar became a fonny currency people would switch quickly. It
would for example not make any sense for a British man to trade in dollars if
he gets say one pence for every dollar. Especially if by the next day it is
worth 0.5 pence.

~~~
gaius
Well there is a conspiracy theory that Iraq was invaded because it was on the
verge of switching to EUR, and if it had OPEC would have followed and the
dollar would have collapsed, taking the US economy with it.

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lsc
at the risk of sounding crazy, has there been a more rational explanation for
our actions?

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gaius
If there was, I haven't heard it. The idea it was about securing access to oil
is laughable. The oil isn't in Baghdad, the oilfields are out in the middle of
nowhere. They could have been taken and held without going anywhere near the
cities.

Plus there is the small matter that we already know how to get oil from Middle
Eastern countries... We buy it.

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d2viant
The part I don't understand is why Japanese citizens would accept such low
returns on their investment for so many years, when so many investments
outside of Japanese government debt would give them higher yields.

Is it a cultural thing? Is it just pure altruism? Do they want to support
their government that much that they're willing to ignore better investments
for their savings?

~~~
artsrc
Seems like a version of this:

<http://en.wikipedia.org/wiki/Equity_home_bias_puzzle>

I don't know why US savers don't invest in Australian dollar accounts either.
They pay about 6 times as much as US term deposits.

[http://www.infochoice.com.au/banking/savings-account/term-
de...](http://www.infochoice.com.au/banking/savings-account/term-deposit-
interest-rates.aspx)

~~~
codexon
I just checked two of those term deposits and they both require Australian
residency. Can I get one of those without living in Australia?

~~~
artsrc
In Australia HSBC offers foreign currency bank accounts, but I can't see that
on the US site.

I work for a fund manager not a bank. Would an ETF for high yield, first
world, countries fixed income products work?

<http://us.ishares.com/product_info/fund/index/FI.htm>

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nathanb
What does it look like when a nation becomes insolvient? How does it affect
its citizens? Its public services?

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incomethax
It looks a lot like how Greece was looking a few weeks back. (Probably still
is looking in all likely-hood)

Most of the national debt is written off, public services are cut or re-
financed through printing money which has the nasty side effect of inflation
and then eventually hyperinflation.

Here's some examples:
[http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype...](http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation)

~~~
startuprules
Anybody with personal accounts from Iceland?

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nedrichards
Yes. And since I lived in the UK my government impounded Icelandic owned
assets up to their value[1] to pay me back my money. Yay for international
relations!

[1]
[http://www.telegraph.co.uk/finance/businesslatestnews/318519...](http://www.telegraph.co.uk/finance/businesslatestnews/3185190/UK-
freezes-4bn-of-Icelandic-assets.html)

~~~
Ardit20
Yeah. Those were strange times. The PM had the decency to threaten to use
anti-terrorism laws against Iceland!

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startuprules
"Millions of Japanese aged 25 to 34 toil as temps or contract employees-- up
from 1.5 million 10 years ago, according to the Ministry of Internal Affairs.
These workers tend to earn about one-third the typical "salaryman" wages that
their fathers earned"

I lived in Tokyo last year in a cheap apartment with alot of young Japanese
people, and I was very surprised by their lack of work ethic/prospect from my
first time in Japan. They would bounce from temp work (typing) to temp work
(waiter) to temp work (salesperson walking everywhere in tokyo door to door),
quitting every 2-3 weeks. They would sometimes sleep in and not show up for
interview, and wouldn't even call to reschedule. The way they would quit a job
they didn't like is by....not showing up anymore. Keep in mind these are
people that went to pretty decent universities in Japan, and speak ok english.
And when they do get a full time job offer, they would have to wait almost
half a year to a year to start working (which I would think depress their
morale).

~~~
masklinn
> and I was very surprised by their lack of work ethic/prospect from my first
> time in Japan

Why would you be surprised by their "lack of work ethics"? They got fucked
hard, so it's understandable that they aren't going to care much for "the man"
anymore: they were told their contract was to work like mad in their studies,
get to a good university and end up landing a good job in a multinational
where they'd work their whole life slowly climbing up the hierarchy and pretty
much guaranteed they'd be there for life.

Instead, at the end of their studies they found an utterly slaughtered job
market and a crappy economy in which Japan has been stuck for 20 years
(especially those who got out during the Lost Decade of the 90s).

They don't have "good work ethics" because they've managed not to be stockholm
syndrome victims, and because reality showed them strong work ethics didn't
matter, and promises were there to be broken.

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potatolicious
Oh bullshit - I'm surprised you got as many upvotes given that this is
supposed to be the entrepreneurial bunch (and our previous mega-thread
involving Scott the useless college grad).

Boo hoo, so the economic sucks and you were lied to your whole life about how
your employment situation was going to work. So? This does not excuse laziness
and a crappy work ethic.

Perhaps their chronic unemployment stems from the fact that they meander
through life rather than actively fighting for what they want. Japan isn't
some third-world backwater, there are opportunities abound for people who are
willing to work and fight for it - just like it still is in the US. The ones
that sit and pout all day (like Scott, from the NYT article) are the ones who
will _never_ get out.

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minouye
If you are implying that the opportunities in Japan are equal to those
available in the US, then I wholeheartedly disagree. Both in terms of startup
culture or slogging through a corporate job, Japan is vastly different from
the US.

Opportunities exist everywhere, and a poor economy is certainly no excuse for
apathy. However, discounting the challenges the economy posed to the rising
generation of Japanese is pretty unfair IMO. The 90's really really sucked.

~~~
potatolicious
I did not mean to make light of Japan's economic challenges in the past two
decades - nor do I mean to imply that Japanese opportunities are equal to that
of the US.

What I mean is, Japan is still an industrial power, and far from a decrepit
backwater - while opportunities were not what they once were, they are still
there for those who seek it.

If anything, a shitty economy and hard times should create people who fight
harder and take less bullshit, not the other way around as the poster had
indicated.

~~~
kragen
Japan is still an industrial power, but that does not imply that
"opportunities ... are still there for those who seek [them]". It means that
there are opportunities. To whom they are available is quite contingent upon
social conditions. It is quite common for opportunities to exist, but to still
only be available to a tiny group of people.

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api
For us, there's a music video:

<http://www.youtube.com/watch?v=gEmJ-VWPDM4>

