freediver wrote on Jun 18
th, 2010 at 8:59pm:
Quote:However, in the short to medium term, the Economic costs will be great.
1) Fortunately, Tokyo real estate hasn't really risen in price much in a long time.
2) This will make it easier for them to support the ageing population, because they won't be trying to support an exponentially increasing population of young people at the same time.
An economy doe not need an ever increasing number of young people to prop up the old people in order to function.
1) That's actually an understatement, the Japanese R/E markets took a huge tumble beginning around 1990, I haven't looked for a while, but I believe it was down about 70%, from 1990 levels. Btw, the USA & Europe are now heading down a similar path and it seems likely that OZ will also, at some point, in the not too distant future.
2) This is where things start to get ineteresting, because Growth is one of the absolutes that underpin all current Economic models.
Be it Growth in Population, Energy supply, Money supply, in fact everything is on an ongoing, exponential increase basis.
And one of the longer term issues is that the Exponential function simply ins't possible to sustain, in the longer term the numbers become too large in everything and it all collapses!
So, long term, we have no option, we need to shrink!
That said, the short to medium term is difficult, because any economy which does not grow, which is in fact going to shrink, takes away many of the things which have come to be accepted as part of the "free enterprise" economic system.
If all markets are shrinking, including Population, Energy & Money, then the profit motive and increased volumes, basically get consigned to the toilet and the old "greed is Good" dies.
Now, some of that may not sound too bad, but the net effect on the economy, in the short to medium term, is that the economy contracts.
As everything delevers, the amount of taxes shrinks tremendously, just at the time when more taxes are needed, to pay for increased Aged Pensions (Baby Boomers) & increased Health Costs (Baby Boomers)
However, the exact opposite is actually happening, as tax revenues shrink, due to the "worker to population participation rate' shrinking, as the Baby Boomers first retire enmass & then pass away, over the next 20-30 years!
Sorry, I hope breakfast was good?