Japan's lost decade--proves Stimulus is the wrong thing to do.

Discussion in 'Economy' started by oreo, Feb 12, 2009.

  1. oreo
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    oreo Gold Member Supporting Member

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    We are right now a carbon copy of this lost decade: Same economic problems, same economic circumstances that brought us to this economic collapse.

    Japan in the 1980's had the stock market of all time. Property values were also sky-rocketing, selling vacant land at about $50,000.00 per sq. foot. Of course, their stock market crashed & property values dropped to 5% of their prior value. Bank loaning practices were as bad as we have seen with Freddie/Fannie--they too were lending to people who could not afford to re-pay the loans.

    The government of Japan--threw billions in spending back into the economy. IT DIDN'T WORK.

    It lasted for 10 years, each new Prime Minister kept throwing government money at the problem in new spending bills to re-vitalize it. Finally a conservative Prime Minister, told the truth to the citizens of Japan--that they were going to go through some pain. The government stopped throwing money at the problem & the economy RECOVERED.

    Barack Obama's theory is that Japan did not act fast enough in throwing money at the economy to revive it. That's why he is determined to rush this bill through.

    Many other economists disagree--stating that when the government stopped trying to solve the problem by throwing billions at it, is finally when Japan's economy came back.

    DID YOU KNOW: The United States also had a lost decade. It was called the Great Depression. President Hoover a republican & President Roosevelt a democrat, both threw billions at road, bridge & dam projects. They didn't work. It was WW2 that eventually brought us out of the Great Depression.
     
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  2. Munin
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    Munin VIP Member

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    Nazi Germany also did government spending (during the great depression): They created the biggest military monster at that time as a result of government spending.

    My point: government spending can have both good and bad effects. Spending is investing, you can do good investments and bad investments. You have both good managers (who do good investments) and bad managers (who do bad investments).

    It is too early to say if Obama is a bad manager, the failure of hiss bills have not been proven up to this day and the opposite is also true: the success of this bills have also not been proven yet.
     
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  3. editec
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    editec Mr. Forgot-it-All

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    No it doesn't.

    All it proves is that it didn't work for Japan.

    The USA is not Japan.

    In fact, even Japan of today isn't Japan of yesterday.

    Economies change and thinking that one can apply the same economic solutions to different problems is just plain old DUMB.

    Do YOU apply the same solutions to EVERY problem?

    No?

    But you imagine that every economy is a consistent thing (with simple rules for how it works) which can easily be understood year after year, don't you?

    If the solution to the problem was as obvious as you think it is, we wouldn't be in this mess to begin with, would we?

    Come on now, Oreao, think it through logically and you'll have to admit that I'd right.

    The economic system we had had morphed into something entirely different than it was even ten years ago.

    The solutions that you think have to work, because you think people really understand how the economy works MIGHT work...or they MIGHT not.

    Uncertainty in chaotic systems...it's what social scientist have no choice but to understand that most propellorheads simply cannot wrap their every problem has a solution oriented minds around.

    Economics isn't rocket science...in fact it's far more complex than rocket science.

    Get used to it.















     
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  4. toomuchtime_
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    toomuchtime_ Gold Member

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    Japan's experience provides dramatic evidence that stimulus alone won't revive the private sector economy. A decade of massive government spending ran Japan's national debt up to 180% of GDP, and while it did give Japan a 3% growth rate, all of it was dependent on government spending at a level that was unsustainable. When Japan finally dealt with the financial crisis that gave rise to the recession by buying up the bad assets that had frozen the banks, the private sector began to recover within a year, businesses were able to invest and soon exports began to grow again.

    Like our recession, Japan's began with a real estate bubble that burst. Sweden also had this experience, but unlike Japan, Sweden never bothered with a stimulus program but immediately began recapitalizing the banks and within a year Sweden's economy began to recover.

    At his press conference, Obama acknowledged that he expected the stimulus bill to only slow down the rate of job loss and that it would not revive the private sector economy, that to do that we needed to unfreeze credit so that businesses would be able to borrow what they need to meet their payrolls and pay their suppliers and to invest in future growth and consumers could borrow what they need so they can spend us out of this recession.

    The administration has been less than honest with us in calling this an economic recovery bill. There is no basis in history or logic for believing this bill will lead to an economic recovery. It is an economic aid bill that will ease some of the pain while the administration either fixes the financial crisis or allows us to slip deeper and deeper into recession.
     
  5. midcan5
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    midcan5 liberal / progressive

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    Japan's lost decade | Business | guardian.co.uk

    "As the world frets over the three-day delay before US Congress meets again to debate a bail-out plan for Wall Street, it is worth remembering that it took Japan's government several years to rescue its stricken financial institutions.

    ....Helped by toothless regulators who turned a blind eye to their losses, the initial reaction was to simply do nothing while banks creaked under the weight of unrecoverable loans."

    and
    "The Great Depression, to 1935"

    "But Sweden would recover faster. This was the result of both a liberal monetary policy and public spending. A reduction in taxes for the average wage earner gave him more money to spend. A raised minimum wage increased the ability of low-income people to spend money. The government increased investments in public works. Federal money was pumped into unemployment insurance, medical care and old age pensions. The government willingly created a deficit, believing that it was emergency spending that would be paid back after the recovery. And with recovery being rapid and revenues increasing as a result of the rising economy, the deficits were quickly overcome.

    Government participation in the economic life of Sweden had increased. The government supported farm prices and protective tariffs for farm products, and giving aid to the unemployed in farming areas helped to slow migration from the countryside into the cities. The Social Democrats gave labor the right to strike, but Sweden had a board that settled worker-management grievances, a board in which labor and management had confidence. And peace between labor and management benefited the economy.

    Sweden's industrialists were disgruntled over higher taxes on their personal incomes, but they did not feel threatened to the extent that they withdrew from participating in the economic recovery. Manufacturing was to remain over 90 percent in the hands of capitalists, and business profits were left untaxed in order to stimulate rapid reinvestment. By 1936, industrial production in Sweden was 50 percent above what it had been in 1929 and unemployment had returned to 5 percent."

    The Great Depression, to 1935

    Summary
     
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  6. rayboyusmc
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    rayboyusmc Senior Member

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    Like I said before, anyone on these boards who says they have the answer and they alone are fools:

    The Great Depression
     
  7. rayboyusmc
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    rayboyusmc Senior Member

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    For ever no there is a yes.:eusa_pray:

    Media Matters - Media cite Japan's "lost decade" to criticize Obama's economic stimulus plan, but economists disagree
     
  8. rayboyusmc
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    rayboyusmc Senior Member

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    You will also find as many articles saying WWII wasn't the cure as saying it was.

    With the uncertainty of what the real course is, why would Obama or the left follow what the right tells them when it goes against their own beliefs?

    Bush tried his stuff for 8 years and we are now a festering pile of fecal foundering. If Obama uses the same approach Bush used, he would be rather poorly advised.
     
  9. del
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    del BANNED

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    you're absolutely right.

    bush combined increased govt spending and tax cuts to bring the country to the brink of bankruptcy.

    obama's smart enough to realize that a combination of tax cuts and increased govt spending is the only answer.

    :lol:
     
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  10. Munin
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    Munin VIP Member

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    Here is a decent review of the Bush mistakes & the mistakes of the democrats during the Bush term.

    The Bush Economy - WSJ.com

    You re not able to spin this, the spending of Bush does not equal to the spending of Obama in any way. You ll see that the answer to every economic problem from the Bush government is TAX-CUTS and not spending. After the stimulus (tax-cuts), the FED (under the control of the Bush government) had failed miserably in keeping the economy under control (stable money).

    It is not the spending or the tax-cuts themselves that are the problem, it is the way the government spends or gives tax cuts.

    Let me explain it to you in a way you will certainly understand as a republican: Tax cuts & Spending are a tool, a tool that can be used in a good way or a bad way just like a gun is a tool that can be used in a good way or a bad way. If you use the tool in a bad way, then it will give you bad results. Does this mean that you need to prohibit the tool that created these bad results? Or do you need to prohibit the way this tool is used (when it created those bad results)?

    It is kind of funny how republicans seem to think that the tools are the problem, this way they throw away all their tools they have and all that is left is small government and a laisez-faire policy.

    "the government is not part of the solution, it is part of the problem" :lol:
     
    Last edited: Feb 12, 2009

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