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Saturday, August 7, 2010

Lost Decades

Items of Interest:

A decade here a decade there pretty soon it adds up.

National Inflation Association:
'Japan: America's Lost Decade' -- The National Inflation Association is pleased to announce that it has released a video report about Japan's "Lost Decade" of deflation and how it relates to the U.S. economy. 'Japan: America's Lost Decade' is the most comprehensive video ever produced about Japan's deflationary crisis of the 1990s. It proves that America is more likely to experience hyperinflation this decade and not deflation like Japan...

Bull Source:
Japan: America’s Lost Decade -- According to NIA, the breaking point for the US economy will occur when Japan, our second largest creditor, stops funding US debts. NIA believes the US will enter into hyperinflation rather than deflation, as the US has entered this decade from the complete opposite position that Japan did during its “Lost Decade.”...

Zero Hedge:
Japan Redux: A Video Case Study Of The Upcoming U.S. Lost Decade -- Whether one believes in inflation or deflation, one thing is certain: in many ways the current US experience finds numerous parallels to what has been happening in Japan for not one but two decades. While major economic, sociological and financial differences do exist, the key issue remains each respective central bank's failed attempts to reflate its economy...

Neil Irwin / The Washington Post:
Aughts were a lost decade for U.S. economy, workers -- The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation's growth.

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism -- there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.

There has been zero net job creation since December 1999...

The Economy’s Lost Decade -- To hell with Japan, we have already had our lost decade — or at least so says the Washington Post. And, it was more than just the stock market that lost ground over the past 10 years...

Tim Swanson / Ludwig von Mises Institute
Why not make it three lost decades?

NY Times:
Japan’s Big-Works Stimulus Is Lesson -- Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery...

Will the US Repeat Japan's Mistakes? -- The US economy "may become enmeshed in a Japanese-style deflationary outcome within the next several years."

The Fed is mulling over its options for dealing with an outbreak of deflation...

David Goldman / FirstThings.com:
Fed Proposals to Counter “Deflation” Are Misguided -- America’s demographic profile has a disturbing resemblance to Japan’s at the beginning of the 1990s,the beginning of its famous “lost decade.” Its population had just began to age dramatically. Over the decade, the elderly dependency ratio rose from 17 percent to 25 percent. As the Japanese aged, their appetite for savings naturally and rationally grew, and they had to save more and more as their stock portfolios and home values crashed. But the more they saved, the worse the economy did...

Lost Decade (Japan)

Gary Shilling: America’s Lost Decade

Stratfor / RealClearWorld:
Japan's Lost Decade Revisited -- Finally, Japan emerged from this extended period of financial and economic distress — though only for a brief time — during the premiership of Junichiro Koizumi (2001-2006), a reformer who attempted to privatize government agencies, cut wasteful programs, rein in Japan’s budgets and map out a plan for reducing the country’s bloated national debt. With the U.S. and global economy booming from 2003 to 2007, Koizumi’s Japan saw consecutive years of growth for the first time since 1997 (though at an unimpressive rate of around 1 percent). Koizumi’s reforms were a start, but in comparison to the size of the country’s problems they were humble. He did little more than slow Japan’s descent. Though he shrank budget deficits during his term, he did not manage to bring them back down even to 1995-1996 levels, and national debt continued to grow (though at a much reduced rate)...

Richard Koo / Entrepreneur.com:
Lessons from Japan's lost decade: why America's experience may be worse. -- Japan's GDP never fell in spite of the massive drop in asset prices and massive increase in private-sector debt repayment because the government borrowed and spent the increased savings and debt repayment that represented the leakage to the income stream. With the government actively putting this sum back into the income stream through its fiscal policy, there was no reason for the GDP to contract. In other words, Japan proved to the world that, even if real estate prices decline by 87 percent and the private sector is obsessed with debt minimization instead of profit maximization, it is still possible to keep the GDP from falling as long as the government puts in an appropriate-sized fiscal stimulus from the beginning and maintains that stance until private-sector balance sheets are repaired...
Denver Post:
Captured: America in Color from 1939-1943 -- These images, by photographers of the Farm Security Administration/Office of War Information, are some of the only color photographs taken of the effects of the Depression on America’s rural and small town populations. The photographs are the property of the Library of Congress and were included in a 2006 exhibit Bound for Glory: America in Color...

Grand Grocery Company. Lincoln, Nebraska, 1942.

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia