Are The U.S. And Europe Headed Down Japan's Road? (Cont)

2) Energy is one of the two major factors that enabled the massive Global Population Growth, from 1 Billion in 1800 to 7 Billion today, the other is Innovation.
In the last 10 years or so, the growth in the Supply Energy resources has started to fall behind the Growth in Population driven Demand.
This has resulted in substantial increases in the Cost of Energy, which is particularly noticeable in Oil, but those increases are also spreading to other Energy sources, especially Fossil Fuels!

The Massive increases in Energy (Oil) costs to national & Global Economies has already added enormously to Cost levels & to the Debt to GDP ratio's of many countries and that contributed substantially to the GFC MK1 crash of 2008!

Whilst many are now contemplating a possible GFC MK2, I contend that we are still in the grip of GFC MK1, as it was only a massive increase in Public Debt that saw GDP stay above break even and if those increased Debts were subtracted, which they should be, then the actual/effective National & Global GDP levels would still be below zero!

3) Which now leads to the third factor, which is the Debt to GDP ratio!
In many nations, such as Greece, Spain, Italy the levels of Debt are now such that it is Publicly expected that some of the affected nations will Default on their National Debts.
This is now creating the likelihood of self re-enforcing tipping points & loops, much the same as Climate Change, which means that smallish problems such as Greece make other dominoes fall, meaning the problem/s & Debt levels become larger, thus roping in bigger Economies such as Spain, then Italy, the UK & finally the USA.

Unfortunately, what most people do, is they tend to look at issues in isolation and not at the total circumstances. Many people also tend towards a positive view of life, in which all problems will somehow be fixed, perhaps because that's usually the way it has been.

That said, these three factors are now combining to become unique in human history and unless there is some "Unique & until now unheard of innovation/technology, which enables us to Globally overcome Peak Energy & Climate Change (Food & Water) and can magically make Debt instantly disappear from the Global Economy, then that Global Economy has indeed Peaked and we have started to descend down a very slippery Economic aftermath.

So, good luck, watch the Debt and start getting actively involved!

Seniors' slice of population hits 23.3%

The Japan Times Online

Elderly people now make up a record 23.3 percent of the population, the internal affairs ministry said in an estimate Friday.

A record-high 29.8 million people were 65 or over as of Thursday, up 240,000, or 0.2 percentage point, from the previous year, the data said.

The tally of seniors breaks down to about 12.73 million men, or 20.5 percent of the male population, and 17.07 million women, or 26.0 percent of the female population, the estimate said.

The estimate is based on data from the 2010 census.

The estimate for those 80 or above was 8.66 million, it said.

Pension benefits to be cut
The government is studying a proposal to cut public pension benefits based on deflation in past years and plans to carry out the change over a three-year period starting in fiscal 2012, sources said Thursday.

Link -
http://search.japantimes.co.jp/cgi-bin/nn20110917a2.html
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So, there are now 23.3% of Japanese who are over 65 years and too old to work, as they are past the retirement age and there is approximately another 13% who are under 15 and too young to work.


http://www.jillstanek.com/2009/02/japan-to-workers-go-forth-and-multiply/

That means, just over one in every three Japanese, is now excluded from the workforce, due to their age!

That is not all that different to their situation from 1950, where some 40.3% fitted that same age area.

However, the Japanese are in transition from the old style Population pyramid of large numbers in the younger (under 15 year olds) Demographic coming thru to working age and very few older pensioners, to what appears to be the complete reversal, by 2050!

So, by 2050 one in every two japanese will be excluded from the workforce, 4 in every 10 will be on an aged pension (compared to 1 in every 25 back in 1950) and those youngsters (under 15) coming thru into the workforce will have shrunk to less than 10% of the total population, compared to some 35% back in 1950.

The questions remain -
1) Who does the work?
2) How can the country afford to pay the pensions?
3) How does the country avoid bankruptcy?
4) What happens to Consumer Demand in Japan, as that older population segment move into a more frugal retirement and then start to die off?
5) As the implications are apparent, why were measures not taken earlier, to compensate?

And, what impact does that suggest for the rest of the world, as most other countries are set to follow a similar pattern to Japan, just delayed by around 20 years?

Markets have clearly become more sceptical about the ability of many countries to stabilise their public debt.

THE International Monetary Fund has slashed its economic forecasts for Australia, warning of a new global recession that would hit commodity prices and drive millions worldwide into unemployment.

Hours before the fund published its unexpectedly gloomy update in Washington, the Reserve Bank of Australia released a statement expressing concern about the global outlook and opening the way for interest rate cuts should things deteriorate.

The Australian dollar slid to a five-week low of US102¢ over renewed concerns about Europe after Italy lost its A+ credit rating. Australian shares fell 1 per cent.

The fund says Australia will grow at only 1.8 per cent this year, down from its previously forecast 3 per cent. The figure is way below the May budget forecast and only half the most recent Reserve Bank forecast, suggesting it will be harder than expected to reach the promised budget surplus in 2012-13.

But it points out that these are best-case forecasts, made on the assumption that almost everything goes right.

Its best case is for "anaemic" growth in the advanced economies of 1.6 per cent and for global growth of 4 per cent.

"However, this assumes European policymakers contain the crisis in the euro area periphery, that US policymakers strike a judicious balance between support for the economy and medium-term fiscal consolidation, and that volatility in global financial markets does not escalate," the fund says.

If one or more of its best-case scenarios does not eventuate, the US and much of Europe could slide back into recession, commodity prices could fall "abruptly" and much of the rest of the world would face a repeat of the global financial crisis.

The update is prefaced by an unusual apology. The chief economist, Olivier Blanchard, says he "largely failed to perceive" the slowdown as it was happening this year, wrongly blaming it at first on one-off events such as the earthquake and tsunami in Japan.

The Treasurer, Wayne Swan, who is about to go to Washington for the annual meetings of the IMF and World Bank, said the update was a "stark warning" that indicated the global economy had entered "a dangerous new phase".

The Reserve expressed concern about "extreme volatility in financial markets" reflecting fears about a global slowdown and an escalation of debt troubles in the US and Europe. It would note these developments in deciding how to move rates.
Link -
http://www.smh.com.au/business/sharp-drop-for-economy-imf-warns-20110920-1kjn6.h...
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A few observations -
1) There is zero chance of any best case scenario getting a look in, over the next 18 months or so!

2) In looking at these amended IMF Growth figures or any other growth figures for that matter, one should always keep in mind what is Nominal & what is Real
Nominal Growth is what is being used here, by the IMF, when they refer to Growth in Australia this year being 1.8%

Nominal growth

is also what's being referred to, when the IMF says that advanced economies will Grow at 1.6% and that global growth will be at 4%.

Real Growth

however, needs to have inflation deducted and when that is applied, all of these Growth figures, suddenly become negative!

In the case of China, it is still said that China is Growing at 9%, but what is not so prominently said is that the Chinese inflation rate is now around 7.5-8.0%, which may still leave some Real Growth. However, even that may be illusory, as Demand starts to slow significantly in both Europe & the USA. That decline in Demand from Europe & the USA will also be reflected in the other BRIC countries and a flow-on effect will be a decline in commodities, from countries such as Australia, which is partially the reasoning for the recent weakening of the OZ$.  

All of that said, these issues have not all of a sudden become "obvious or expected", organisations such as the IMF, the RBA, the FED Reserve, various Financial commentators/Economists and major Polictical Party's, particularly those who are in government have knowledge of the major factors which are influencing Global Economics, but they usually do not mention expected adverse outcome, because that extra credence may just make those possible outcomes into self fullfilling prophecies.

Then, there is also the issue of self interest, which also especially relevant to TPTB and which trickles down thru the system to Politicians and the like!  

The Truth is, we are very much like the old MUSHROOMS, we are expected to grow in the dark and be fed

crap

-

C

redible

R

eliable

A

bundant

P

aradoxes

Precious Metals: Just a Squiggle

Now this is a correction. In the space of three days gold is off 10% and silver 25%.

What’s happening? Two things:
First, you don’t get this kind of run without this kind of correction. When something soars, the number of people with huge embedded profits eventually reaches a tipping point where, for a while, selling necessarily overwhelms buying. So regardless of what’s happening in the world, gold running from $300 to $1,900 and silver from $4 to $49 would create exactly this kind of volatility.

Second, all the borrowing we did to stave off the 2008 debt crisis has created a new one, with Greece on the verge of default and the US in trillion-dollar-deficit gridlock — and a realization that the people nominally in charge have no idea what they’re doing. Where new plans to create jobs or lower long term interest rates used to be met with enthusiasm, they’re now being met with disdain. This is huge. In the space of a few months the dominant financial fear has shifted from inflation back to deflation.

In other words, it’s 2008 again, but with much bigger debt numbers. Which takes us back to precious metals: Notice on the chart below that gold got whacked the last time conditions were deflationary. Between early and late 2008 it lost about 25%.

Gold - Last 5 Years


Some thoughts:
It’s impossible to overstate the panic that the world’s politicians and central bankers are experiencing.

They have no idea what’s happening now that the magic power of easy money seems to have failed

. And because easy money is all they know, they will absolutely, without the slightest doubt, double down in coming months, flooding the US and Europe with credit.

Ironically, Europe’s troubles actually make it easier for the US to keep easing, because credit creation depends on the willingness of the rest of the world to accept dollars.

As long as dollars are in demand — as they are now, as capital flees the euro in favor of US Treasury bonds — the Fed can create more dollars and Washington can continue to issue more debt. Expect them to ramp it up big-time in the near future.

And politics doesn’t matter. The idea that president Mitt Romney or Rick Perry would accept a 1930s style depression in order to balance the budget is laughable. Faced with the prospect of becoming their generation’s Herbert Hoover, they’ll open the monetary floodgates just as certainly as would a second-term Barack Obama. In Germany, the recent bailouts may soon cost Chancellor Angela Merkel her job, but as a reader commented on a recent DollarCollapse article:

   Merkel is effectively losing one election after another but she loses to the left. The German left is pro integration and pro bailouts. In this weekend elections in Berlin, the minority party of the current coalition, that can be compared to the tea party, lost even the 5% quorum to have a representation to congress. They campaigned against Europe.

In other words, the next generation of European leaders will be hired by voters sick of austerity and will therefore be even more favorably disposed to bailing out everyone in sight.

This is profoundly positive for precious metals. As stomach-churning as this correction seems, a decade from now it will look like just another squiggle in a long, steep uptrend.

Link -
http://dollarcollapse.com/precious-metals/precious-metals-just-a-squiggle/
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Gold - Last 3 days


Silver - Last 3 days


In terms of TPTB, I would have put it slightly different -

They have no idea what’s happening or that money really doesn't have any magic powers.

That said, at some point a realisation will dawn that the US$ is not actually a safe haven and it will collapse, under the weight of massive Debts, but that may be a little further down the track, after the demise of the EURO!

NorthOfNorth wrote on Sep 24^th, 2011 at 5:46pm:


Oh, I understand the comment!

However, the "Real Truth" is usually coloured by the tint of the glasses worn.

Therefore, depending on the beliefs of the owner of the glasses, the "Real Truth" may take on one of the many faces of the Hydra?

http://t2.gstatic.com/imagesq=tbn:ANd9GcSqxss1oez3ORJZ4wjlho1ng8DxI_4Cv6V-B2UMy_p1xjCOKZ3j

Btw, it's worth noting that whilst the Hydra has many heads, they are all linked to the one body and a similar analogy also applies to Politics & TPTB!

Signs The Perfect Economic Storm Is Coming

The financial world is officially going crazy. Can you believe what is going on out there right now? Financial markets have been jumping up and down like crazy for months and this is creating a lot of fear. Other than during the financial crisis of 2008, in the post-World War II era have we ever experienced as much financial instability as we are seeing right now? Should we just accept that massive financial instability is going to be part of "the new normal" in the financial world? The wild swings that we are witnessing in the global financial marketplace are making a whole lot of people very nervous right at the moment. When markets go up, they tend to do it slowly and steadily. When markets go down, a lot of times it can happen very rapidly. Also, as I have mentioned before, more major stock market crashes happen during the fall than during any other time of the year. The last major financial crisis happened during the fall of 2008, and things are starting to look a little bit more like 2008 with each passing day. The last thing the global economy needs right now is another major financial meltdown, but that may be exactly what we are about to get.

The Dow got absolutely hammered once again on Thursday. It was down almost 400 points, and it has lost a total of 674.83 points over the last two days combined.

A couple of days ago, I discussed 21 signs that the financial world was on the verge of a nervous breakdown. But I had no idea that things would get so ugly so soon. So what comes next?

One of the keys is to watch what the "insiders" are doing. Often they will say one thing and do another. At the moment, corporate "insiders" are selling 7 dollars of stock for every 1 dollar of stock that they are buying. Over the past couple of weeks, "insider" investing behavior has changed dramatically. The following is from an article that was recently posted on MarketWatch....

The insiders have vanished.
Chief executives. Board members. The head honchos. The people who know. Just a few weeks ago, they were out in force, buying up shares in their own companies with both hands. No longer. They’ve disappeared. Almost overnight. “They’ve stopped buying,” says Charles Biderman, the chief executive of stock market research firm TrimTabs, which tracks the data.

For some reason, this almost always starts happening before a crash. So obviously this is not a good sign.

Not only that, but a third very troubling sign is that an extraordinary number of bets have been placed against the S&P 500. As I noted the other day, if there is a stock market crash in the next few weeks, somebody is going to make a ton of money....

It doesn't take a genius to see all the dark financial clouds that are gathering on the horizon.

As fear spreads, it is only going to make global financial instability even worse. If something doesn't change, we could soon have a full-blown panic on our hands.

So why should the rest of us care if global financial markets crash and a bunch of bankers lose a whole lot of money? Well, unfortunately our entire economic system is based on credit. When the last financial crash happened in 2008, the credit markets got really tight. Economic activity started to freeze up. We entered a deep recession and unemployment skyrocketed.

The truth is that the U.S. economy is in the middle of a long-term decline. The economy declined badly while George W. Bush was in office, and the decline has accelerated since Barack Obama entered the White House.

As I wrote about yesterday, the American people are feeling really depressed about the economy and 80 percent of them believe that we are in a recession right now.

We live in unprecedented times. The financial world has become incredibly unstable, and none of us is really quite sure what "the new normal" is going to look like after all of this is over.

But one thing is for sure - things never stay the same for long. The way that things have been in the past is not how things are going to be in the future.  

A "perfect storm" is coming. Everything that can be shaken will be shaken.

You better get ready.

Link -
http://seekingalpha.com/article/295457-signs-the-perfect-economic-storm-is-comin...
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The Truth is, there are some major negatives lining up against the Global Economy and regrettably the signs are not good!

That said, this author is suggesting that some of TPTB may already be bailing, ahead of another October crash?

Go to following lateline site, then click onto story with Gerrard Minack, who is the chief Economist with Morgan Stanley.
Minack gives his views on Europe, the USA and Future.


http://www.abc.net.au/lateline/

the markets have become more volatile.
Some good coys are selling on a very good yield, it's getting close to the stage where one should borrow to buy these better coys.
the yield and tax write off on repayments will essentially repay the loan.

So you'll get given blue chip shares for nothing. Thanks.

Fear and greed run the markets.
Nothing is new - read "reminisces of a stock operater", a book now now about 90 years old .