Japan.. is collapse inevitable?

Definitely not a brilliant discussion in  my book just a collection of miscellaneous comment with little context and partial truths.

For a start in 1997 the Asian Crises almost crippled Japan. It's banks were exposed and several large corporates where facing bankruptcy. One can argue the toss till the cows come home about how it was handled but Hashimoto was probably on the right track. Japan set the game plan on how to kick the proverbial can down the road. No one was prepared to take their medicine instead the corporates and banks would be allowed to suck the tax payer dry for the next few decades through bail outs and stimulus. 

For the best part of 20+ years Japans economic health has progressively deteriorated as credit expansion (debt) has been the preferred solution to cutting spending and living within their means. 

Whether Japan likes it or not austerity will eventually be imposed upon it by the markets. If 1997/98 was painful the next dose will be excruciating by comparison.

Ziv you are extraordinarily one eyed and parochial with regards to Japan. You counter fact with opinion and little else then defer to debunked economists like Krugman and chit-chat in the comments section of articles as somehow supportive of your position.

I don't dispute your investing strategy nor the fact cash flow and PM are optimal in a Japanese markets compared to others. A deteriorating or stagnant capital gains profile over the years and associated FX risk diminish this market in my opinion but everyone has their comfort zone and long game specific to their own circumstances. Everyone to their own in other words. 

I retain an interest in property from an academic point of view but don't invest time, money or energy simply because the returns are pitiful. I learnt a long time ago that you'll earn (within reason) the kind of income you target. If you think $1000/wk is good money and target jobs in that bracket that's what you'll earn. While targeting $20k/wk may be unrealistic $5k/wk isn't. And so it goes with investing. Small deposits, minimal if any liquidity, 10 x leverage and long payoff times with aggregate returns around 5-8% just don't get me excited. 

I invest in small business and the basic rules are;

• No more than $50k at a time 
• capital back within 12 weeks from start of operations.
• Overhead limit is 20% of gross.
• Income growth must be exponential to expense growth
• max 2 people to operate
• hours must not average more than 30/wk
• annual returns of at least $200k/yr

Learning how to do this took a lot of blood sweat and tears over the years. What I've learnt over the last 35 years is relevant to most forms of investing so in this forum I try to pass on a little of that knowledge. 

Humanity, human civilisation is entering a watershed moment. Population growth over the next 40 years will approach 9B, food demand is set to soar, water is already in short supply and forecast to become even more scarce, global warming is challenging food production along with water shortages and the most challenging of all will be the cost of energy as demand rises and supply contracts. That impinges upon a countries economic ability to cope as the cost of energy ripples through the supply chain and magnifies the problems.

We are at a cross roads now where these things are starting to be felt. GFC 2008 was a foretaste of things to come if we don't get our house in order and theres no real sign of that. If you think technology will save us then you're either uninformed or delusional. Technology has slowed our arrival at the inevitable not solved the problem as many would have hoped. Virtually all credible experts indicate we are behind schedule in our efforts (and falling further behind) to transition to a less energy dependent civilisation. 

Now I know you're thinking "He's all doom and gloom". Not so. The problem with most people out there and many on this forum is they look at the world as if the next 20 years will reflect the last 20 years more or less. They strategise about investing with that mindset in place when they really need to be thinking about what challenges we face and how can I take advantage of those changes/opportunities while avoiding the pitfalls.

Now given that property is considered a long term investment I have a problem with property as the most useful asset to be holding over this period when there are probably better options out there. As a percentage of an investment portfolio I have no problems but definitely not all ones eggs in one basket.

The future I see looks something like Japan. It's the poster boy for economic failure. 20 years of no growth in a booming global economy fueled by easy credit. If you can't correct your imbalances in times of plenty then what chance in times of global difficulty. We are in an era where we are stumbling from crises to crises but refusing to address the fundamental problems within our economies which lead to structural weakness and waste the few resources we have to correct the problems. Add food, energy and population challenges to the mix and the world is in for a tough time especially those in the bottom half socio economically.

So my preference is to stay as liquid as possible (I hold no assets other than personal items) and any asset I buy must be able to generate substantial ROI. I also stay as geographically mobile as possible. I can pick up sticks and move a household within a week if I need. I suppose I prefer to be cash rich asset poor as a means to cope with any challenges that may come my way. 

The only thing coming with me when I die are memories. I spend my money accumulating those in preference to tangibles and I'll be highly disappointed if I haven't consumed every cent of my accumulated earnings (and some of the banks if possible) by the time I kick the bucket. 

Youch!!!   Ziv chill man you'll pop an artery. I'll catch you later… taking the old girl for Mexican shortly so I'll probably spot you tomorrow maybe if I get time Moding the ute and a trailer to take one of these babies…

Wahoooo!!!

I know Ziv thinks things will all get nicely sorted out with China but the reality doesn't support that contention at this point. I have a sneaking suspicion that China is actually enjoying pushing Japans buttons. 1) a bit of payback for WII   2) to test the US resolve and   3) disable Japan economically. I don't see any love lost there at all.

http://www.zerohedge.com/news/2013-02-05/chinese-warship-prepared-fire-japanese-destroyer-last-week

Its a bit of feel good rubbish to prop up Abe I suspect.

Some basic facts about Toyota. It doesn't export. It has over 18 production plants located in its major markets along with another 8 or so subsidised JV in largely 3rd world countries. My guess is that its accounting practices locate it's taxable income in the most favorable economies. I seriously doubt it holds much of earnings or wealth in Yen.

The Yen thing is a smoke screen. Over the last 10 years the yen has been high 8/10 and its latest profit was when the yen was high. It's productivity boost is more like due to stimulus in some of its major markets like the US. 

Japan's next challenge with a lower Yen is how it handles the input side. Tough in the bottom 1/3 of the populace who are either below (1/6) the poverty line or just above it.