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

[toomuchtime_]

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.

Japan's experience provides dramatic evidence that stimulus alone won't revive the private sector economy?

Not exactly..


Japan's recent experience provided dramatic evidence that in the case of Japan of the recent past the econmic stimulus that they tried did not work in Japan as phoped.

Do you actually know anything about that stimulus?

For example, did you know that while Japan was opening up the purse strings and building something to stimulate the economy, it was also increasing taxes which have the exact opposite effect on the money supply?

I'll bet you didn't. But even if you had it wouldn't matter because apparently you think that Japan's economy and ours are similar enough that you can draw inferences from their experience to apply to ours.

That's the kind of a mistake that I am sympthetic to because I once beleived that sort of dislogical thing, too.

I no longer do





Then you have proved exactly nothing accept that you think Japan's economy and ours are the same animal.

They're not. Not remotely.



Japan economy is still rather lame, FYI. Their economy not anywhere nearly so healthy as it was two decades ago.



Great...we recapitalized our banks, too. So why can't we speak Swedish?



Bully for him. That sounds like a a plan.

Damned shame neither you nor he nor I nor anyone else will KNOW what that will do except for the most obvious things like if you give some people money they will have some money. But what they will do with it, and what effect it will have on the economy, and how those effects will play out on other people, and what they will do, and when they do what other people will do when they hear of it, and how the world will react and what the weather on that day will be and how that will effect the price of tea in china...(pant! pant! pant!)..

NOBODY KNOWS!​

I concur. I think they ought to call this plan the:

"Holy Shit!!! We broke capitalism again!

Quick! let's throw taxpayers' money at it and hope the people don't rise up and kill our class like we so justly deserve." plan.

Now THAT would be a more honest description of what the heck's going on, I think.




There is no basis in history or logic for believing that anything anyone has suggested WILL lead to economy recovery.

It's a freaking leap of faith, is what I am attepting to explain to you.

There is no reason to believe that we can KNOW what it would take to have economic recovery AT ALL.

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.

I totally agree...that's what it is... a plan that they HOPE will relieve SOME pain.

A plan that may or may not fix anything or may make it worse, or may not do something so unbelievably unpresidented and unexpected that nobody could possibly have imagined what would happen.

And FWIW you can take MY statement of complete uncertainty to the bank.

If you can't specify what you think the critical differences between the US economy and the Japanese economy are with respect to the situmulus, then you haven't said anything.

 

[oreo]

Check out what the business taxes are that are actually paid and post a link.

The Japanese did just like FDR, they listened to the conservative nay sayers and slowed down the spending during the process which in turn worsened their economy.

If this stimulus starts US back on a road to recovery, will you still deny it worked. Even Obama has said this is only a start.

Here is a 2009 tax example of why the 250K tax proposal is counterproductive to new private sector job growth.

Small business or Sub-S corporations whom are the largest private sector employer in this country.

Example # 1
Yearly gross sales = $300,000.00
Business expenses = ($167,500.00)
Net business income = $132,500.00

Owner of business reports as gross income on 1040 $132,500.00
Less 1040 deductions ($ 15,000.00)
Net taxable income = $ 117,500.00
Federal income tax liability= ($ 26,046.00)

Example # 2 doubles gross sales--representing growth in one business
Yearly gross sales = $600,000.00
Business expenses = ($335,000.00)
Net business income = $265,000.00

Owner of business reports as gross income on 1040 $265,000.00
Less 1040 deductions = ($ 15,000.00)
Net taxable income = $250,000.00
Federal income tax @ 39% as new rate proposed ($ 80,141.50)

I am being kind on the tax liability for someone making 250 K. As I know the tax base rate will also be increasing, once inacted. It will be more than the $80,141.50.

Note that sales double, business expenses, including cost of more employees double, risk doubles, headaches double & Federal income tax more than tripples.

This tax policy is negative incentive for small private sector businesses to grow. To let you know I am a Sub-S 30+ year small business electrical contractor. I have survived many recessions, including the worst during the Carter administration.

I like everyone else on this board, would like to see the economy get back on it's feet. It's critical. The reason for this thread, is for rational discussion, without emotion, or Obamahype, on what we believe will work, & what has been proven not to work. It's not about bashing President Obama. He has his ideas, I have my own.

 

[Munin]

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.

One sign of a good manager is that he plans before he spends. This bill is basically a compilation of all the crap that the Democrats wanted in the last administration and didn't get, emptied from member's hard drives into a huge list. Obama has no idea what's on the list, nor does he car. Its all about buying votes for 2010 and 2012.

Yeah, it seems to look a lot like that because we don't have enough details (that s one of the reasons why I said it is too early to say if Obama is a bad manager). The main problem is transparency, which is the reason why we can speculate on that.

Their is no doubt that the democrats may have abused this bill for their own political purposes, but what exactly makes this so different from the behavior of the republicans? They would have done it too, in fact they have done it too (in the past). Isn't this something you could expect from a democratic majority or a republican majority (people voted for them to do this)?


Stimulate First, Ask Questions Later
With the stimulus bill, Obama chose urgency over transparency. With the stimulus bill, Obama chose urgency over transparency. - By John Dickerson - Slate Magazine

One thing is for sure: His campaign slogan of change and his promise of transparency, will give a lot of ammunition.


The thing is: had he been transparent wouldn't that have caused both political parties to debate too long? So he couldn't have pushed this through when it was needed most (in his first 3 weeks).

It really is a double edged sword, because transparency could hurt the economy more because it now is in such big need of this stimulus & bailouts that waiting could mean that this stimulus becomes useless because the economic problems have outgrown the previous economic situation where the stimulus package was able to stabilize it.


It could be comparable like having one bucket of water to extinguish a fire and if you wait too long the one bucket of water won't be enough to extinguish that fire because it has grown bigger (you now need at least 2 buckets of water). This situation could explain Obama s recent uncertainty and Biden s relief that he could announce that his bucket of water was still big enough (70% of success) to extinguish the fire (economic crisis).

This may excuse Obama s behavior (lack of transparency to favor speed) because you don't have time to debate which bucket to use to extinguish a fire. Time will tell I guess ...

 

[editec]

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.

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.

Right--Obama did in fact admit that jobs are best created by the private sector.

Hell yes they are. That means that the job is being created on somebody else's dime!

It's the unfreezing of small business credit & a lower tax rate to business that will stimulate this economy into sustained private sector growth.

Very likely.

During the Great Depression the mistake was--that a spirt in employment gains normally resulted in tax hike increases, which then lead to another long term recession.

I have no clue what the above means.

We have two factors in this, not only tax hikes. But the cost of gasoline. Both are capable of sending any employment gains, back into recession

.

Two factors? This is why I think you are somewhat confused about our economy. There are billions of "factors" that effect our economy.

I don't believe this current administration is capable of lowering business taxes which are currently at 39%. In fact the second highest in the world.

I do not think, and I certainly hope, that Obama is NOT planning on raising ANYONE'S taxes at this time.

The time to have raised taxes was decades ago, actually.

But NOW, that would be, I suspect, a mistake,

 

[editec]

If you can't specify what you think the critical differences between the US economy and the Japanese economy are with respect to the situmulus, then you haven't said anything.

Really?

Fine, if you want to imagine that the Japanese economy is just like ours, I won't bother to point out the enormous differences btween the USA and Japan.

But here's how your apparenty logic works:

Since both John and Jack have brown hair and blue eyes they are the same.

Now, John has a broken leg

And since Jack once had a broken arm and the cast they put on it helped, the obvious solution to John's broken leg is to put a cast on his arm...just like worked so well for JACK!

My point is that you're missing the point, lad.

Given the enormous amount of bullshit we are ALL exposed to about economics, I can't really blame you for being mislead into thinking that every so called capitalist society's economy works exactly like every other.

My point is that every economy is a completely unique event which is no more like any other economy than Jack is like John.

My point is that Jack of today is not even much like Jack of ten years ago, too.

But I can see how the fact that both of those people (Jack of the past and Jack of today) share many similarities, you might be inclined to think they're the SAME person.

but would be foolish enough, given their similarities to assume that what Jack of the past needed ten years ago, was a good thing, that he MUST therefore need the same things TODAY?

I don't think you're quite that confused.

But when it comes to the economy, I think you are missing the point that every economy is different (even if they announce they are the same for of cpaitalism) and more that every economy today is different than the economy of yesterday, too.

Economies are NOT static, and every one is entirely UNIQUE and each one is CONSTANTLY changing, too.

 

[Toro]

I have a good link on why this isn't the case. I'll post it later.

The problem in Japan regarding public works was not the stimulus that came far too late to keep them out of deflation. There should have been more of it when the crisis began. The problem was that there was that the economy was too reliant upon it in the first place.

A constant or slightly higher level of public works is a poor substitute for a dynamic economy. But a high level that does not get higher is not stimulus.

 

[toomuchtime_]

If you can't specify what you think the critical differences between the US economy and the Japanese economy are with respect to the situmulus, then you haven't said anything.

Really?

Fine, if you want to imagine that the Japanese economy is just like ours, I won't bother to point out the enormous differences btween the USA and Japan.

But here's how your apparenty logic works:

Since both John and Jack have brown hair and blue eyes they are the same.

Now, John has a broken leg

And since Jack once had a broken arm and the cast they put on it helped, the obvious solution to John's broken leg is to put a cast on his arm...just like worked so well for JACK!

My point is that you're missing the point, lad.

Given the enormous amount of bullshit we are ALL exposed to about economics, I can't really blame you for being mislead into thinking that every so called capitalist society's economy works exactly like every other.

My point is that every economy is a completely unique event which is no more like any other economy than Jack is like John.

My point is that Jack of today is not even much like Jack of ten years ago, too.

But I can see how the fact that both of those people (Jack of the past and Jack of today) share many similarities, you might be inclined to think they're the SAME person.

but would be foolish enough, given their similarities to assume that what Jack of the past needed ten years ago, was a good thing, that he MUST therefore need the same things TODAY?

I don't think you're quite that confused.

But when it comes to the economy, I think you are missing the point that every economy is different (even if they announce they are the same for of cpaitalism) and more that every economy today is different than the economy of yesterday, too.

Economies are NOT static, and every one is entirely UNIQUE and each one is CONSTANTLY changing, too.

Once again, if you can't specify what you think the critical differences between the Japanese and US economies are with respect to a stimulus, as you apparently cannot, then you have said nothing. Every person is different from every other person, too, yet doctors conclude that if a treatment helps in some cases, it is likely to help in other cases, despite the fact that these people may be very different in very important ways, as long as these differences do not seem to effect the condition that is being treated. If a doctor said, as you are saying, I can't apply the same treatment to this person because it has worked on other patients because, well, they are not exactly the same, he would be thought to be either stupid or crazy. Now, if you are saying the Japanese stimulus efforts hold no lessons for the US economy because they eat more sushi and rice than we do, you would make a very poor doctor, but if you can point out differences that are relevant to the stimulus effort, I'd be interested i hearing them.

 

[editec]

If you can't specify what you think the critical differences between the US economy and the Japanese economy are with respect to the situmulus, then you haven't said anything.

Really?

Fine, if you want to imagine that the Japanese economy is just like ours, I won't bother to point out the enormous differences btween the USA and Japan.

But here's how your apparenty logic works:

Since both John and Jack have brown hair and blue eyes they are the same.

Now, John has a broken leg

And since Jack once had a broken arm and the cast they put on it helped, the obvious solution to John's broken leg is to put a cast on his arm...just like worked so well for JACK!

My point is that you're missing the point, lad.

Given the enormous amount of bullshit we are ALL exposed to about economics, I can't really blame you for being mislead into thinking that every so called capitalist society's economy works exactly like every other.

My point is that every economy is a completely unique event which is no more like any other economy than Jack is like John.

My point is that Jack of today is not even much like Jack of ten years ago, too.

But I can see how the fact that both of those people (Jack of the past and Jack of today) share many similarities, you might be inclined to think they're the SAME person.

but would be foolish enough, given their similarities to assume that what Jack of the past needed ten years ago, was a good thing, that he MUST therefore need the same things TODAY?

I don't think you're quite that confused.

But when it comes to the economy, I think you are missing the point that every economy is different (even if they announce they are the same for of cpaitalism) and more that every economy today is different than the economy of yesterday, too.

Economies are NOT static, and every one is entirely UNIQUE and each one is CONSTANTLY changing, too.

Once again, if you can't specify what you think the critical differences between the Japanese and US economies are with respect to a stimulus, as you apparently cannot, then you have said nothing. Every person is different from every other person, too, yet doctors conclude that if a treatment helps in some cases, it is likely to help in other cases, despite the fact that these people may be very different in very important ways, as long as these differences do not seem to effect the condition that is being treated. If a doctor said, as you are saying, I can't apply the same treatment to this person because it has worked on other patients because, well, they are not exactly the same, he would be thought to be either stupid or crazy. Now, if you are saying the Japanese stimulus efforts hold no lessons for the US economy because they eat more sushi and rice than we do, you would make a very poor doctor, but if you can point out differences that are relevant to the stimulus effort, I'd be interested i hearing them.

Okay...the saving rate of the people...shall we start there?

How about the amoutn of money spent on Defence?

How about the fact that Japan is essantially a homgenized society demogrpahically?

How about the fact that Japan does NOT have 1 in 8 people living there who were born in a nation other than Japan?

How about the fact that Japan LOST WWII?

How about the fact that Japan is within a short boat ride to China and North Korea.

How about the fact that Japan's population is older than ours?

How about the fact that Japan is a net EXPORTER and we are a the world's greatest IMPORTING economy?

If you didn't KNOW these things, then YOU are an idiot.

If you knew then, but demanded that I point out the STAGGERINGLY OBVIOUS, then you are merely an asshole.

Your' choice, 2much.

I'd believe you if you told me that you were an idiot OR that you were an asshole.

Of course I'd believe even more if you told me you were both.

 

[Munin]

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.

I found this interesting article that also talks about the comparisons of the Japanese crisis of the past and the current US crisis:

" TOKYO — The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan’s banking crisis have three words for the Americans: more money, faster.

The Japanese have been here before. They endured a “lost decade” of economic stagnation in the 1990s as their banks labored under crippling debt, and successive governments wasted trillions of yen on half-measures.

Only in 2003 did the government finally take the actions that helped lead to a recovery: forcing major banks to submit to merciless audits and declare bad debts; spending two trillion yen to effectively nationalize a major bank, wiping out its shareholders; and allowing weaker banks to fail.
By then, Tokyo’s main Nikkei stock index had lost almost three-quarters of its value. The country’s public debt had grown to exceed its gross domestic product, and deflation stalked the land. In the end, real estate prices fell for 15 consecutive years.

More alarming? Some students of the Japanese debacle say they see a similar train wreck heading for the United States.

“I thought America had studied Japan’s failures,” said Hirofumi Gomi, a top official at Japan’s Financial Services Agency during the crisis. “Why is it making the same mistakes?”

Many American critics of the plan unveiled Tuesday by Treasury Secretary Timothy F. Geithner said the plan lacked details. Experts on Japan found it timid — especially given the size of the banking crisis the administration faces.

“I think they know how big it is, but they don’t want to say how big it is. It’s so big they can’t acknowledge it,” said John H. Makin, an economist at the American Enterprise Institute, referring to administration officials. “The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks.”

Instead, the Japanese first tried many of the same remedies that the Bush administration tried and the Obama administration is trying — ultra-low interest rates, fiscal stimulus and ineffective cash infusions, among other things. The Japanese even tried to tap private capital to buy some of the bad assets from banks, as Mr. Geithner proposed.

One reason Japan’s leaders were so ineffectual for so long was their fear of stoking public outrage. With each act of the bailout, anger grew, making politicians more reluctant to force real reform, which only delayed the day of reckoning and increased the ultimate price tag. Japanese taxpayers are estimated to have recouped less than half what it cost the government to bail out the banks.

A further lesson from Japan is that the bank rescue will determine the fate of the wider economy. While President Obama has prioritized his stimulus plan, no stimulus is likely to succeed unless the banking sector is repaired.


The Japanese crisis of the 1990s and early 2000s had roots similar to the American crisis: a real estate bubble that collapsed, leaving banks holding trillions of yen in loans that were virtually worthless.

Initially, Japan’s leaders underestimated how badly the real estate collapse would hurt the country’s banks. As in the United States, a policy of easy money had fueled both stock and real estate speculation, as well as reckless lending by banks.

Many in Japan thought that low interest rates and economic stimulus measures would help banks recover on their own. In late 1997, however, a string of bank failures set off a crippling credit crisis.

Prodded into action, the government injected 1.8 trillion yen into Japan’s main banks. But the injections — too small, poorly planned and based on little understanding of the extent of the banking sector’s woes — failed to stem the growing crisis.

Fearing more bad news if banks were forced to disclose their real losses, Japan’s leaders allowed banks to keep loans to “zombie” companies on their balance sheets.

Japan, instead, experimented with a series of funds, in part privately financed, to relieve banks of their bad assets.

The funds brought limited results at best, says Takeo Hoshi, economics professor at the University of California, San Diego. For one thing, the funds were too small to make an impact. The depository for bad loans had no orderly way to sell them off. And the purchases that did take place failed to recapitalize banks because the bad assets were priced so low.

So far, the Obama administration’s plan avoids the hardest decisions, like nationalizing banks, wiping out shareholders or allowing banks to collapse under the weight of their own bad debts. In the end, Japan had to do all those things.

Economists say these blunders meant Japan’s financial system did not start to recover until late 2002, six years after the crisis broke. That year, the government of the reformist leader Junichiro Koizumi ordered a tough audit of the country’s top banks.

Called the Takenaka Plan after Heizo Takenaka, who headed the government’s financial reform efforts, the move finally brought the full extent of bad loans to light. Initially, banks lashed out at Mr. Takenaka. “The government can’t order bank management to do this and that,” Yoshifumi Nishikawa, president of the Sumitomo Mitsui Financial Group, complained to the press in October 2002. “It’s absolutely absurd.”

But Mr. Takenaka stood firm. His rallying cry, he said in an interview on Wednesday, was, “Don’t cover up. Don’t distort principles. Follow the rules.”

“I told the banks clearly, ‘I am in a position to supervise you,’ ” Mr. Takenaka said. “I told them I am not open to negotiation.”

It took three more years to finally get the majority of bad loans off the banks’ books. Resona Bank, which was found to have insufficient capital, was effectively nationalized.

From 1992 to 2005, Japanese banks wrote off about 96 trillion yen, or about 19 percent of the country’s annual G.D.P. But Mr. Takenaka’s toughness restored faith in the banks.

“That was a turning point in the banking crisis,” said Mr. Gomi of the Financial Services Agency, who worked with Mr. Takenaka on the audits.

By then, other factors had fallen into place that aided economic recovery, including a boom in exports to the United States and China.

(Those very share holdings would come back to haunt banks, as the recent market sell-off batters their balance sheets. And as the economy worsens, bad loans are again on the rise, the Financial Services Agency said Tuesday.)

The United States will probably not be able to count on growing demand for its products, since the global economy is worsening.

“The way things are going right now,” said Mr. Hoshi, “the U.S. taxpayers’ burden will keep going up and up.” "

http://www.nytimes.com/2009/02/13/business/economy/13yen.html?ref=business




Also very interesting is this article (but it is to big to post completely):

" ... In a nutshell, Japan’s experience suggests that infrastructure spending, while a blunt instrument, can help revive a developed economy, say many economists and one very important American official: Treasury Secretary Timothy F. Geithner, who was a young financial attaché in Japan during the collapse and subsequent doldrums. One lesson Mr. Geithner has said he took away from that experience is that spending must come in quick, massive doses, and be continued until recovery takes firm root.
...

Moreover, they say, any direct comparison of Japan and the United States is inevitably misleading, because Japan has spent so much more over the years on infrastructure. Having neglected its roads, bridges, water treatment plants and more over the years, the United States is bound to generate a greater payback for such spending than would Japan.

Beyond that, proponents of Keynesian-style stimulus spending in the United States say that Japan’s approach failed to accomplish more not because of waste but because it was never tried wholeheartedly. They argue that instead of making one big push to pump up the economy with economic shock therapy, Japan spread its spending out over several years, diluting the effects. ..."

http://www.nytimes.com/2009/02/06/w...nce/Times Topics/People/G/Geithner, Timothy F.

It s good to know that we have an guy with experience with that situation at the highest possible economic position in the US, I think we probably couldn't have had a better guy at that spot right now (despite his tax-problems).

 

[toomuchtime_]

Really?

Fine, if you want to imagine that the Japanese economy is just like ours, I won't bother to point out the enormous differences btween the USA and Japan.

But here's how your apparenty logic works:

Since both John and Jack have brown hair and blue eyes they are the same.

Now, John has a broken leg

And since Jack once had a broken arm and the cast they put on it helped, the obvious solution to John's broken leg is to put a cast on his arm...just like worked so well for JACK!

My point is that you're missing the point, lad.

Given the enormous amount of bullshit we are ALL exposed to about economics, I can't really blame you for being mislead into thinking that every so called capitalist society's economy works exactly like every other.

My point is that every economy is a completely unique event which is no more like any other economy than Jack is like John.

My point is that Jack of today is not even much like Jack of ten years ago, too.

But I can see how the fact that both of those people (Jack of the past and Jack of today) share many similarities, you might be inclined to think they're the SAME person.

but would be foolish enough, given their similarities to assume that what Jack of the past needed ten years ago, was a good thing, that he MUST therefore need the same things TODAY?

I don't think you're quite that confused.

But when it comes to the economy, I think you are missing the point that every economy is different (even if they announce they are the same for of cpaitalism) and more that every economy today is different than the economy of yesterday, too.

Economies are NOT static, and every one is entirely UNIQUE and each one is CONSTANTLY changing, too.

Once again, if you can't specify what you think the critical differences between the Japanese and US economies are with respect to a stimulus, as you apparently cannot, then you have said nothing. Every person is different from every other person, too, yet doctors conclude that if a treatment helps in some cases, it is likely to help in other cases, despite the fact that these people may be very different in very important ways, as long as these differences do not seem to effect the condition that is being treated. If a doctor said, as you are saying, I can't apply the same treatment to this person because it has worked on other patients because, well, they are not exactly the same, he would be thought to be either stupid or crazy. Now, if you are saying the Japanese stimulus efforts hold no lessons for the US economy because they eat more sushi and rice than we do, you would make a very poor doctor, but if you can point out differences that are relevant to the stimulus effort, I'd be interested i hearing them.

Okay...the saving rate of the people...shall we start there?

How about the amoutn of money spent on Defence?

How about the fact that Japan is essantially a homgenized society demogrpahically?

How about the fact that Japan does NOT have 1 in 8 people living there who were born in a nation other than Japan?

How about the fact that Japan LOST WWII?

How about the fact that Japan is within a short boat ride to China and North Korea.

How about the fact that Japan's population is older than ours?

How about the fact that Japan is a net EXPORTER and we are a the world's greatest IMPORTING economy?

If you didn't KNOW these things, then YOU are an idiot.

If you knew then, but demanded that I point out the STAGGERINGLY OBVIOUS, then you are merely an asshole.

Your' choice, 2much.

I'd believe you if you told me that you were an idiot OR that you were an asshole.

Of course I'd believe even more if you told me you were both.

Clearly you believe all kinds of silly things, which is why it is so often necessary for me to tutor you.

Unless you can point out how these differences are relevant to the efficacy of a stimulus plan, what you are saying is no different from saying that the fact the Japanese eat more rice and sushi than we do means that we can't compare the economies. Let's take one of your less obviously ridiculous statements: exactly why does the fact that Japan is a net exporter and the US is a net importer lead you to believe a stimulus program might work better here than it did in Japan? In both cases, the recession was brought on by a credit crunch that denied corporations the capital they needed to meet operating expenses, so why would the fact that one was producing for foreign markets and the other primarily for a domestic market make a difference if they didn't have adequate access to capital to meet operating expenses?

Similarly, why would the fact that the Japanese have a much higher saving rate than we do make a difference if corporations don't have adequate access to capital to meet existing demand, in Japan's case from foreign markets and for us from domestic markets? Even if the Japanese had been willing to spend all of their money, Japanese companies wouldn't have been able to meet that greater domestic demand any better than they had been able to meet foreign demand without greater access to credit.

The rest of your statements are just too silly to respond to, just more sushi and rice differences. Trying to fix a recession that is caused by a credit crunch with a stimulus is like putting more gas in your car because your battery went dead, and that is true whether it is a Japanese car or a Swedish car or an American car. If you want the car to get moving again, you've got to recharge or replace the battery, and if you want an economy, any economy, that has stalled because of a lack of capital to get moving again, you've got to replace the capital, not just try to increase the demand for it.

 

[oreo]

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.

Hell yes they are. That means that the job is being created on somebody else's dime!




Very likely.



I have no clue what the above means.

.

Two factors? This is why I think you are somewhat confused about our economy. There are billions of "factors" that effect our economy.

I don't believe this current administration is capable of lowering business taxes which are currently at 39%. In fact the second highest in the world.

I do not think, and I certainly hope, that Obama is NOT planning on raising ANYONE'S taxes at this time.

The time to have raised taxes was decades ago, actually.

But NOW, that would be, I suspect, a mistake,

It would be a huge mistake to raise "anyone's" taxes at this time. The point being that during the FDR administration, even small employment gains resulted in tax hikes. A very "anti" business climate--brought on by bank closures & of course the stock market crash. Americans hated business & the banks. Why wouldn't they--the bank just took their money--stock market collapsed--. Interesting fact: This is why crooks like Baby face Flloyd & others of the 1930's era were able to hide in plain site within the American public. No one would turn them in, they in fact--turned into hero's for robbing banks. My great aunt--lived to be 95 years old. She mentioned to us when she was 90 years old that her life savings of $30,000.00--she had been keeping in a fishing tackle box hidden in her home. We had to take it & deposit it in a savings account, with her complaining about it all the way to the bank.

As far as the anti-business attitude in this country: This sounds a little familiar as to what is going on today?

Obama has promised over & over again that anyone making over 250K will get a tax hike, while those under that bar get a tax break.

I imagine that is his intentions.

"I am confused about this economy"? I am a 30+ year Sub-S small business electrical contractor. I see & feel the recessions long before most do, & way before the government statistics tell us we're in a recession. Therefore, I most certainly do understand economic conditions. In college--economics was a favorite topic of mine. I feel that economics 101 should be made mandatory in secondary education.

DID YOU KNOW: That during the Great Depression, the Mexican peso was actually tradable currency along our southwest borders. Also, the state of Utah was well known for bartering goods to obtain paper tickets--to buy goods with. The unemployment rate at BEST during the 1930's registered at 15.7% unemployment. The minority unemployment rate was triple that.

 

[Munin]

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.

I found this interesting article that also talks about the comparisons of the Japanese crisis of the past and the current US crisis:

" TOKYO — The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan’s banking crisis have three words for the Americans: more money, faster.

The Japanese have been here before. They endured a “lost decade” of economic stagnation in the 1990s as their banks labored under crippling debt, and successive governments wasted trillions of yen on half-measures.

Only in 2003 did the government finally take the actions that helped lead to a recovery: forcing major banks to submit to merciless audits and declare bad debts; spending two trillion yen to effectively nationalize a major bank, wiping out its shareholders; and allowing weaker banks to fail.
By then, Tokyo’s main Nikkei stock index had lost almost three-quarters of its value. The country’s public debt had grown to exceed its gross domestic product, and deflation stalked the land. In the end, real estate prices fell for 15 consecutive years.

More alarming? Some students of the Japanese debacle say they see a similar train wreck heading for the United States.

“I thought America had studied Japan’s failures,” said Hirofumi Gomi, a top official at Japan’s Financial Services Agency during the crisis. “Why is it making the same mistakes?”

Many American critics of the plan unveiled Tuesday by Treasury Secretary Timothy F. Geithner said the plan lacked details. Experts on Japan found it timid — especially given the size of the banking crisis the administration faces.

“I think they know how big it is, but they don’t want to say how big it is. It’s so big they can’t acknowledge it,” said John H. Makin, an economist at the American Enterprise Institute, referring to administration officials. “The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks.”

Instead, the Japanese first tried many of the same remedies that the Bush administration tried and the Obama administration is trying — ultra-low interest rates, fiscal stimulus and ineffective cash infusions, among other things. The Japanese even tried to tap private capital to buy some of the bad assets from banks, as Mr. Geithner proposed.

One reason Japan’s leaders were so ineffectual for so long was their fear of stoking public outrage. With each act of the bailout, anger grew, making politicians more reluctant to force real reform, which only delayed the day of reckoning and increased the ultimate price tag. Japanese taxpayers are estimated to have recouped less than half what it cost the government to bail out the banks.

A further lesson from Japan is that the bank rescue will determine the fate of the wider economy. While President Obama has prioritized his stimulus plan, no stimulus is likely to succeed unless the banking sector is repaired.


The Japanese crisis of the 1990s and early 2000s had roots similar to the American crisis: a real estate bubble that collapsed, leaving banks holding trillions of yen in loans that were virtually worthless.

Initially, Japan’s leaders underestimated how badly the real estate collapse would hurt the country’s banks. As in the United States, a policy of easy money had fueled both stock and real estate speculation, as well as reckless lending by banks.

Many in Japan thought that low interest rates and economic stimulus measures would help banks recover on their own. In late 1997, however, a string of bank failures set off a crippling credit crisis.

Prodded into action, the government injected 1.8 trillion yen into Japan’s main banks. But the injections — too small, poorly planned and based on little understanding of the extent of the banking sector’s woes — failed to stem the growing crisis.

Fearing more bad news if banks were forced to disclose their real losses, Japan’s leaders allowed banks to keep loans to “zombie” companies on their balance sheets.

Japan, instead, experimented with a series of funds, in part privately financed, to relieve banks of their bad assets.

The funds brought limited results at best, says Takeo Hoshi, economics professor at the University of California, San Diego. For one thing, the funds were too small to make an impact. The depository for bad loans had no orderly way to sell them off. And the purchases that did take place failed to recapitalize banks because the bad assets were priced so low.

So far, the Obama administration’s plan avoids the hardest decisions, like nationalizing banks, wiping out shareholders or allowing banks to collapse under the weight of their own bad debts. In the end, Japan had to do all those things.

Economists say these blunders meant Japan’s financial system did not start to recover until late 2002, six years after the crisis broke. That year, the government of the reformist leader Junichiro Koizumi ordered a tough audit of the country’s top banks.

Called the Takenaka Plan after Heizo Takenaka, who headed the government’s financial reform efforts, the move finally brought the full extent of bad loans to light. Initially, banks lashed out at Mr. Takenaka. “The government can’t order bank management to do this and that,” Yoshifumi Nishikawa, president of the Sumitomo Mitsui Financial Group, complained to the press in October 2002. “It’s absolutely absurd.”

But Mr. Takenaka stood firm. His rallying cry, he said in an interview on Wednesday, was, “Don’t cover up. Don’t distort principles. Follow the rules.”

“I told the banks clearly, ‘I am in a position to supervise you,’ ” Mr. Takenaka said. “I told them I am not open to negotiation.”

It took three more years to finally get the majority of bad loans off the banks’ books. Resona Bank, which was found to have insufficient capital, was effectively nationalized.

From 1992 to 2005, Japanese banks wrote off about 96 trillion yen, or about 19 percent of the country’s annual G.D.P. But Mr. Takenaka’s toughness restored faith in the banks.

“That was a turning point in the banking crisis,” said Mr. Gomi of the Financial Services Agency, who worked with Mr. Takenaka on the audits.

By then, other factors had fallen into place that aided economic recovery, including a boom in exports to the United States and China.

(Those very share holdings would come back to haunt banks, as the recent market sell-off batters their balance sheets. And as the economy worsens, bad loans are again on the rise, the Financial Services Agency said Tuesday.)

The United States will probably not be able to count on growing demand for its products, since the global economy is worsening.

“The way things are going right now,” said Mr. Hoshi, “the U.S. taxpayers’ burden will keep going up and up.” "

http://www.nytimes.com/2009/02/13/business/economy/13yen.html?ref=business




Also very interesting is this article (but it is to big to post completely):

" ... In a nutshell, Japan’s experience suggests that infrastructure spending, while a blunt instrument, can help revive a developed economy, say many economists and one very important American official: Treasury Secretary Timothy F. Geithner, who was a young financial attaché in Japan during the collapse and subsequent doldrums. One lesson Mr. Geithner has said he took away from that experience is that spending must come in quick, massive doses, and be continued until recovery takes firm root.
...

Moreover, they say, any direct comparison of Japan and the United States is inevitably misleading, because Japan has spent so much more over the years on infrastructure. Having neglected its roads, bridges, water treatment plants and more over the years, the United States is bound to generate a greater payback for such spending than would Japan.

Beyond that, proponents of Keynesian-style stimulus spending in the United States say that Japan’s approach failed to accomplish more not because of waste but because it was never tried wholeheartedly. They argue that instead of making one big push to pump up the economy with economic shock therapy, Japan spread its spending out over several years, diluting the effects. ..."

http://www.nytimes.com/2009/02/06/w...nce/Times Topics/People/G/Geithner, Timothy F.

It s good to know that we have an guy with experience with that situation at the highest possible economic position in the US, I think we probably couldn't have had a better guy at that spot right now (despite his tax-problems).

"So far, the Obama administration’s plan avoids the hardest decisions, like
nationalizing banks, wiping out shareholders or allowing banks to collapse under the weight of their own bad debts. In the end, Japan had to do all those things."



We re getting to the hardest decisions (read the rest of the paragraph above and you might see what s next ):



"WASHINGTON -- Former Federal Reserve Chairman Alan Greenspan thinks it's necessary. His successor, Ben Bernanke, doesn't rule it out. From editorial pages to the blogosphere to boardrooms, this is the question on many minds: Should the United States nationalize some banks?

A few months ago, it would have been heretical to suggest that Bank of America could become Bank Owned by America. Now, however, the U.S. economy is sinking faster than anyone thought possible, and respected economic authorities are suggesting that temporary bank nationalization, once the domain of Third World basket cases, could be the best solution.

"It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring," Greenspan, the long-revered sage of free-market theory, told London's Financial Times in an interview published Wednesday. "I understand that once in a hundred years this is what you do."


... "

Nationalizing troubled banks increasingly seen as best solution - Breaking news - Belleville News-Democrat

 

[Charles_Main]

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.

Great post, Which shall me dismissed and ignored by the Left.

 

[sealybobo]

Republicans are such idiots. What about the last 8 years? Add the next two years that it'll take to clean up the mess, and this was even worse than Japan's lost decade.

Republicans are shameless. They put us in this hold and have the nerve to even open their mouths? Amazing.

You didn't hear me talking shit after Jimmy Carter. Did you?

No. Know why? Because it was Sealybobo's lost decade.

Time for the GOP to take 10 years off.

 

[sealybobo]

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.

Great post, Which shall me dismissed and ignored by the Left.

Yes, and only 2 more years before Obama gets us out of it.

 

[wimpy77]

Republicans are such idiots. What about the last 8 years? Add the next two years that it'll take to clean up the mess, and this was even worse than Japan's lost decade.

Republicans are shameless. They put us in this hold and have the nerve to even open their mouths? Amazing.

You didn't hear me talking shit after Jimmy Carter. Did you?

No. Know why? Because it was Sealybobo's lost decade.

Time for the GOP to take 10 years off.

republicans dont wanna talk about the last 8 years because they think everything bush did was great. he could have dealt with this in last year if he wanted too but didn't. it is a well known fact that paulson decided to change his strategy because he wanted the obama administration to deal with the problem not him.

 

[Charles_Main]

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.

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.

HUH? lol