GeminiAtlas

The Demise of Japan as an Economic Power?

I will have to agree with Nagano Jim here.
The role that the Japanese goverment has played in the business affairs has created more or less a state capitalist society ( i.e. Japan, Inc.) or neo-mercantalist policies to produce an export driven economy. Basically the investment decisions are driven by high level industrial policy of the government. So investments haven't gone to what the Japanese domestic population would want to buy. Also, would add to Jim's comment that the high level of government intervention also produced risk averse enterprises, or at least 'zombie' entities that produce less value than they are worth.


On Nov 05 04:35 PM Nagano Jim wrote:

> I disagree with the premise of the article. The problem is not that
> the Japanese don't spend enough. Nations do not become wealthy because
> simply because their people spend a lot. This is kind of like saying
> a child becomes tall because he eats a lot. If the child is not growing,
> eating a lot will just make him fat. What makes the child taller
> is growth. That Japan's citizens don't spend a lot is a symptom,
> not the disease.
> To generate growth, the private enterprise in a nation must create
> new and better products and services. What made Japan flourish in
> the 1970s and 1980s was primarily that its manufacturing might was
> constantly finding new ways to produce high quality products that
> people wanted faster, cheaper, and at better quality.
> What Japan needs now is a major injection of entrepreneurship. I
> read a statistic somewhere recently that as much as 80% of all the
> companies in Japan date from the Meiji period (starting in the 1860s).
> Japan needs to unleash its creative minds to generate the new items
> and services that will capture the world's imagination. It needs
> to remove the barriers in its legal and economic system that are
> strangling entrepreneurship. Entrepreneurship is risk taking, and
> the Japanese are highly risk averse. Therefore, there needs to be
> a concerted push to come from the top to get people to try to make
> their ideas into reality. Only then will Japan be able to create
> value and start to significantly grow again.

Is This the End of 'Too Big to Fail'?

Not sure why Congress likes to make big complicated to police regulatory schemes (and too easily gamed) that will in all likelihood fail to prduce the desired outcome. Unless of course, failure to regulate IS the real desired outcome. Given the current campaign finance structure, it would not take too long to figure out why...

In any case, if they are too big to fail, it means they are too big, period. Accordingly they would need to be charged a risk premium to be "too big to fail" as right now they are free-riding the risk to the taxpayers. Since the congress is so keen on "progressive" tax schemes, then maybe it can be progressive in leverage ratios (fat chance). in that regard, the risk premium to be paid would be in reigned-in lending ratios. Basically, the bigger you are as a bank, the more conservative the lending ratio you are allowed. So the huge mega-banks are required to be 10-to-1 or something like that, and the smaller regional banks can be allowed a higher ratio, since if they fail, it is not systemically risky as if Citi were to founder. Of course, one might suppose that the big banks might try to make riskier loans to make more money under such a regime. But that would happen anyways, much better bad loans at 10:1 then 30:1. On another note, under such a scheme, maybe the big banks would be "encouraged" to spin-off/sell-off disparate operations/portfolios into different smaller companies in order to shrink themselves and be able to lend at higher ratios again.

Why Too-Big-to-Fail Shouldn't Be Codified

I'd say either add a chapter to bankruptcy or to the anti-trust. If they are too big to fail, it means they are too big, period. Accordingly they would need to be charged a risk premium to be "too big to fail" as right now they are free-riding the risk to the taxpayers. Thus, either A: use anti-trust to break up the company a la Ma-Bell into smaller companies and see which ones fail and which ones succeed thereafter. Or B: Since the congress is so keen on "progressive" tax schemes, then maybe it will be progressive in leverage ratios. in that regard, the risk premium to be paid would be in reigned in lending ratios. Basically, the bigger you are as a bank, the more conservative the lending ratio you are allowed. So the huge mega-banks are required to be 10-to-1 or something like that, and the smaller regional banks can be allowed a higher ratio, since if they fail, it is not systemically risky as if Citi were to founder. Of course, one might suppose that the big banks might try to make riskier loans to make more money under such a regime. But that would happen anyways, much better bad loans at 10:1 then 30:1.

The Great Shift: China Rising, U.S. Falling

Not so sure about the thesis you put forth due due to some of the challenges faced by China in many of the comments above.
I would add that some other trends are emerging in manufacturing which might render the manufacturing investments China has made obsolete.
There is the myth of US "de-industrialization." The manufacturing jobs have declined but overall industrial output is as high as ever due to ever increasing automation. This will probably continue until it's much like the agricultural industry, 1%-2% of the population to run the robots that make everything and more of it each year.
The percentage of GDP relative to overall GDP attributed to Manufacturing will also shrink, but there will still be more "stuff" that is made. This trend is also starting to take hold in sectors of the service industries. Have you called up a travel agent lately to book airline flights? I thought not. Increasing levels of automation and innovation will continue these trends. Soon we might have robots making other robots that perform services, such as cleaning or fighting wars, etc. for us (roomba anyone?).
Even in engineering, I see these trends, increasing use of ever-more powerful software that automates certain low-level engineering design work are increasing the output of each engineer. The effect is better designed products that are developed with increasingly faster product-development cycle times.
Also, the diversity of products being designed are proliferating. The cost-effectiveness of these products will come from "flexible" manufacturing cabilities that can run low-number production numbers easiliy and with less and less set-up costs. Pretty soon, the cost/part of a one-off part will be almost the same as a million part-run. Companies will be able to make parts "on-demand" and thus try out ideas quickly, letting the market itself tell them to make more or not. Read about "the long tail" coined by Chris Anderson to get the idea. What effect will this have on jobs? Well, I'll tell you, those that are the most creative, the most agile, most networked, most innovative will be the winners, and those that cling to the way things are will be the losers. And the need for strong technical skills is a plus but increasingly, even those are becoming "commoditized" so that even those without technical skill but have creativity, can compete by having good ideas and "innovation networks" to get the idea out there. Incidently, the cost of failure is getting lower and lower (due to the agile manufacturing mentioned above) and the fact that one can "rent" the talent/resources on-demand, and thus there is no need to invest (take the added risk) in capital equipment/skills that you can just contract out to someone who specialized in that area. Of course, that also means you have competition from everyone else too, but that will make everyone better I hope.

Is There Really a Global 'Cabal' Aiming to Dump the Dollar?

It's like a good old-fashioned Mexican standoff.
The Chinese with its hand on the "dump the dollar button" and the US with its hand on the "Monetize the debt" button. Beads of sweat gather on Uncle Sam's brow, the Dragon's eye twitches slightly. Makes for a good movie. I'll have to make some popcorn and watch the show...

Will the Dollar Decline Forever?

As long as the Fed is in charge of the printing presses, of course the dollar will go down forever. That's what's happened in the last 90-odd years, hasn't it? The purchasing power of a dollar today is a tenth (probably less even) of what is was in 1913. That's what the congress wants because it imposes a tax without calling it a tax. Good thing most of the electorate is too stupid to realize it. :)
Except it lets them (congress) spend more than they receive in revenues so that eventually money supply is inflated to pay off its debts in depreciated money. I bet they laugh too "haha, suckers!"

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

Doing some quick calculations 12mosx$15B/month, federal workers take in ~$180B/year. This is out of ~$3T federal budget, or about 6% of the budget. Eliminating federal jobs will not solve the "government is spending too much" problem. Much of the problem of course is the entitlement programs (social security medicare medicaid). Eliminate these programs and you would cut the fed budget in half. Problem solved.
I fully expect never to collect a dime from these programs (as I have probably 35 more years of work ahead of me), so I am planning accordingly. Many of my cohorts know this too. They wouldn't be too surprised to see these programs eliminated either. Of course to eliminate them, it should be phased out over 10 years or more.

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

I agree,
I'm not sure we're comparing apples to apples here. I would like to know how the numbers came about. Are they comparing the same job-types? The federal gov't would tend to have a lot more white collar types (i.e. lawyers, engineers, scientists, accountants).
Also, I would want to know what the breakouts are. What is salary, health, especially what is the OH or Overhead which would be illuminating. This reminds me about the gender pay gap myth. Once every other variable is controlled for, that gap disappears.
Also, what would happen if they also counted the Military personnel as part of this Federal workforce number? I'm sure the aggregate would go down as the officers/enlisted don't get paid that much.


On Sep 08 10:28 AM JOHNCHAP2 wrote:

> Your simplistic presentation substantially distorts the real truth.
> Comparing federal employment which is very heavily weighted in professional
> and white collar jobs to the working population as a whole where
> blue collar and non skilled labor make up a large percentage is simply
> either a dishonest or incompetent comparison. It appears to be the
> same type of distortions that have entered into the anti health reform
> debate that we are currently seeing.
>
> Most of the compensation comparisons, which are required by law to
> be conducted on a job by job basis, show that the Feds lag behind
> the private sector. While it is admittedly an outlier example, look
> at the $175K income of a Cabinet Secretary (e.g., DOD) versus the
> tens of millions of dollars received by top executives in the private
> sector. Now I would call those megabuck compensation packages to
> the CEOs, many of failing companies, lavish.
>
> It is true that Federal employment looks really enticing in times
> of economic instability. But most of the time over the last 40 years
> or so most people looked down with distain on Federal emplyoyment
> and would never consider working for the Feds.

Four Problems Undermining Future American Prosperity

Exactty, we (or our children) will pay the piper one way or the other. Either way it is high taxes to pay back the debt. Inflation after all is just another hidden tax which punishes the most prudent (savers and investors) and let's the least prudent (debtors such as the federal government) off the hook.
But soon the devaluation way is the only way they will be able to go as the debt becomes unserviceable, unless other foreign governments start to demand that our public debts be denominated in their currencies. In one way (long term), that would be good if that happened as it would force some discipline on the Congress because they don't control the printing press of other countries. In the short term, it would have other more burdensome consequences.

On Sep 03 02:03 PM fjd10595 wrote:

> If it doesnt' is still impacts our kids, won't they pay the price
> of devaluation.

Jobless Claims Stuck at 570,000

I would agree. Business owners are wary to hire because of policy uncertainty. They don't know what's coming down the pike or not such as healthcare reform, cap and trade, etc. so they take the "wait and see" approach instead of being proactive. Of course, every business taking the "wait and see" approach at the same time doesn't bode well. So, in essence, the government is making the problem worse by even debating these "business friendly" issues. Same thing for students choosing a field to work in. "Is the gov't going to nationalize healthcare? Not sure, best to go into something else just to play it safe"
And a few years from now , we'll be wondering about a sudden drop in new healthcare workers who are already desperately needed.

On Sep 03 10:10 PM Joe Shareholder wrote:

> Why would anyone be hiring right now with as much uncertainty as
> there is out there. Obama's cap and trade certainly isn't industry
> friendly, and neither are the tax increases Obama has hit businesses
> with. Add health care increases because someone has to pay for the
> public option. Simply put, zero incentive.

Four Problems Undermining Future American Prosperity

I wouldn't say the Medicare/Medicaid/Social Security are good programs. They create a huge opportunity cost. What about the "forgotten man"? What things would the payers of the these taxes (and I mean taxes because I probably won't see any of that money again) spent the money on? What new enterprises would they create and build? How much could-have-been wealth has been destroyed because of these programs? And would if this wealth would have been created instead of "invested" in these programs? Would our combined wealth be much higher than it is even today? Probably much higher. And would it have made our healthcare cost less than it does now, comparatively speaking. Probably.

On Sep 03 09:32 AM MPT failed wrote:

> Yes, who said Medicare is a "good program?" El Presidente says its
> costs are out of control. How could any Congress be dumb enough to
> pass and open ended program that says "We will pay for everything
> you, your family or your doctor wants--forever?" A 12 year old could
> have predicted that the costs would bankrupt the country. But nobody
> has the guts to say how we are going to limit the costs (you can
> call it rationing or death panels, but it is all about reducing costs).
> Instead they want to create a smokescreen of an all new healthcare
> system so they can sneak rationing in without ever having a public
> discussion. We need to turn out this entire Congress of Baby Kissers
> and put in smater, more honest people for limited terms.

Four Problems Undermining Future American Prosperity

I agree, replacing one deadly sin (greed) with another (envy) is not an improvement. However, I believe the problem stems from lack of a free market. The entrenched "rich" interests buy favorable legislation (with attendant complicated regulation that they wrote themselves) to keep any new competition down to a minimum. Therefore, they get gov't sanctioned virtual "monopolies" or at least the illusion of competition via cartels to keep profits up for the in-group and exclude any new entrants. Not that I blame them. They are just protecting their interests. If they can more easily do it in the political market than the free market, they will do it. Not only to make it easier on themselves, but also to pre-emptively co-opt the congress which would come up with even dumber ideas left to its own devices.
Basically, the problem is the the congress is not following the Constitution by guaranteeing "equal protection under the law" which of course would imply equal treatment under the law. Of course, special tax breaks, subsidies for some groups, surtaxes for others, different tax rates for different types of economic activity (saving vs. consuming vs. investing), heavy regulation for this industry, light regulation for that industry does not seem to be "equal treatment."


On Sep 03 09:38 AM acttang wrote:

> The hatred toward wealth, such as expressed here, was the root of
> the revolutions that swept half of the earth from the beginning to
> the middle of the last century. As long as the wealth is accumulated
> via legal ways, forced redistribution brings more problems than it
> solves, in a long run. It isn't a coincidence that almost all communist
> countries, formed as a result of forced wealth redistribution, typically
> headed by a passionate leader with misguided sense of social fairness,
> eventually disappeared. Because eventually, a sustainable and prosperous
> society is one that rewards the risk takers with wealth.
>
> On Sep 03 07:29 AM Michael Clark wrote:

Bloomberg vs. the Fed: Secrecy and Moral Hazard

It does seem like the big banks are using (manufacturing?) this as an opportunity to shake competition down by blackmailing the federal gov't out of bailout money, ensuring their own survival while at the same time weeding out the competitive field of the smaller upstart banks. This is to increase thier market share in the future.


On Sep 01 07:41 AM nyse 30 wrote:

> big banks will win big from the collapse as they will prosper even
> when DJIA will be 5000, in the end only up to 30 banks will remain
> in US

Healthcare, Education: Two Reasons to Worry About America's Future

"free market" haha that's funny. One of the reason's for all the fat people is subsidies for corn. The subsidies make nutrition-poor foods filled with high fructose corn syrup (HFCS). The subsidies also make other "better-for-you" foods more expensive having less land to grow on because corn is grown on the land to make more Uncle Sugar money (pun intended). So the already-dumbed down populace can't afford better foods to eat, because their jobs suck because they don't have an education, so they buy the food they can afford which makes them fat, which then lowers job expectations because who really wants to hire fat people, etc.
The solution would be to stop giving subsidies for food and let the "free market" sort things out. Of course ADM...er, I mean, the senators from a lot of big flat states would not allow that to happen.
As far as public education problem, the teacher's unions need to be broken somehow (not sure how that could be done). Does anybody else get tenure and summer's off for their jobs? I know I don't. Teachers continually complain about not being paid enough. Well, that's because of the summer off and tenure. If the dead-wood could get fired easier like the rest of us and worked the whole year (because parents could pay more to the school instead of having to pay for day-care for the summer), then they would be better compensated for making a better product. In this case a better educated student.


On Aug 27 09:34 AM enigmaman wrote:

> on one hand you have a problem where the free market have caused
> a weight problem in America because they have the right to choose
> and they have chosen to be fat, on the other hand you have a dumbed
> down populace due to our poor Public School system because in America
> most dont have the ability to choose because the Gov has chosen for
> you. You imply to worry about our future because of these but then
> focus on how to profit from its failure, maybe thats exactly why
> we have the problems we have today and thats why we see the erosion
> of our free market system being orchestrated by the Administration,
> now nobody wins

Cash for Clunkers: Wasteful and Stupid

Congratulations!
As they say, "don't hate the player, hate the game"
I also second the statement that our "leaders" (I use this term loosely) have only vague, often erroneous conception of even the rudiments of the dismal science.


On Aug 19 02:57 PM Donn Soderquist wrote:

> My 1996 Jeep Grand Cherokee was not going to make it much longer,
> needing around $2000 in repairs to make it last another 2 years.
> My new KIA Sportage LX V-6 was made in Korea, so the UAW got no help
> from me. Price was $200 over invoice. $3000 KIA rebate. $4500 Cash
> for Clunkers. 100,000 mile warranty, not 30,000. I wrote a check
> for $16,500. Super deal thanks to the financial idiots in Congress
> and the White House.