Bank of Japan to be top shareholder of Japan stocks(asia.nikkei.com)
asia.nikkei.com
Bank of Japan to be top shareholder of Japan stocks
https://asia.nikkei.com/Business/Markets/Bank-of-Japan-to-be-top-shareholder-of-Japan-stocks
51 comments
We are not in as bad a shape as japan, but you are right.
The stock markets around the world have been propped up by central banks since the financial crisis.
The FED stepped in with a few trillion in QE to save wall street. The ECB implemented their own QE. BoJ also in japan. And even china has stepped in to prop up it's stock market although their stock market is much younger, smaller and less systematically important.
And so the world goes round and round. Historically, printing money and artificially propping up assets doesn't end well, but if everyone is doing it, maybe it'll work out?
The stock markets around the world have been propped up by central banks since the financial crisis.
The FED stepped in with a few trillion in QE to save wall street. The ECB implemented their own QE. BoJ also in japan. And even china has stepped in to prop up it's stock market although their stock market is much younger, smaller and less systematically important.
And so the world goes round and round. Historically, printing money and artificially propping up assets doesn't end well, but if everyone is doing it, maybe it'll work out?
I did read that if you stripped out demographics, Japan was one of the best performing economies on GDP growth per (working) capita and productivity.
I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes. If my theory is right, in 10-15 years after the baby boom generation demography will level out again and we will be back to higher growth.
I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes. If my theory is right, in 10-15 years after the baby boom generation demography will level out again and we will be back to higher growth.
Japan will be Japan long after the United States has splintered apart due to its own internal contradictions.
The idea that GDP growth is the most important metric for the health of a society is not even wrong.
The idea that GDP growth is the most important metric for the health of a society is not even wrong.
”I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes.”
You are a quick thinker my friend. If you figure out how capitalism can work on a shrinking or even steady state economy you will get the Nobel price. No kidding.
You are a quick thinker my friend. If you figure out how capitalism can work on a shrinking or even steady state economy you will get the Nobel price. No kidding.
Doesn't the need for continuous growth come from the interest charged on newly created money? We always have to grow to be able to afford the ever growing amount of money we owe.
With a non debt based currency, capitalism could do just fine in a shrinking economy no?
With a non debt based currency, capitalism could do just fine in a shrinking economy no?
I'm not an economist by a long shot, but I would like to propose an alternative model: Whenever a bank gives out a loan, it not just creates the money that is given to the debtor. It also creates the money that will have to be paid as interest, and gives that money to the government. That could be the government's primary income stream, instead of taxes. And it guarantees that there is always enough money in the system to pay all outstanding debts.
(Looking forward to more knowledgable people pointing out the inherent flaws in this idea.)
(Looking forward to more knowledgable people pointing out the inherent flaws in this idea.)
Take some ideas from this posts:
"There is No Steady State Economy (except at a very basic level)" http://ourfiniteworld.com/2011/02/21/there-is-no-steady-stat...
Limits to Growth–At our doorstep, but not recognized http://www.resilience.org/stories/2014-02-12/limits-to-growt...
Wealth And Energy Consumption Are Inseparable http://www.declineoftheempire.com/2012/01/wealth-and-energy-...
Galactic-Scale Energy http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...
"There is No Steady State Economy (except at a very basic level)" http://ourfiniteworld.com/2011/02/21/there-is-no-steady-stat...
Limits to Growth–At our doorstep, but not recognized http://www.resilience.org/stories/2014-02-12/limits-to-growt...
Wealth And Energy Consumption Are Inseparable http://www.declineoftheempire.com/2012/01/wealth-and-energy-...
Galactic-Scale Energy http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...
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Same situation in US in my opinion. It’s crazy to not be all in on equity index funds, since everyone is invested in them via 401k and pension funds, of course the government is going to do whatever it takes to prop up the value.
You're getting it backwards my dude.
Baby boomers turned 65 this year, the peak retirement there will ever be in the history of the world.
Individuals selling small amounts of stock, each for slightly below midpoint, actually has a much larger negative effect on prices than one large sale at slightly below midpoint does. Think about what the order book looks like over time.
People expect a sudden recession. The ride to the bottom is going to be a-historically long and slow, as retirement accounts unwind contractually slowly, and big institutional investors wait out lower capital gains taxes.
Baby boomers turned 65 this year, the peak retirement there will ever be in the history of the world.
Individuals selling small amounts of stock, each for slightly below midpoint, actually has a much larger negative effect on prices than one large sale at slightly below midpoint does. Think about what the order book looks like over time.
People expect a sudden recession. The ride to the bottom is going to be a-historically long and slow, as retirement accounts unwind contractually slowly, and big institutional investors wait out lower capital gains taxes.
I think the government will be incentivizing stock ownership much more via state sponsored 401k, or HSAs, or 529, etc. Even now, we're only at just above 50% of population having a stake in public companies:
https://www.chicagotribune.com/business/ct-americans-dow-220...
Also, number of public companies is decreasing, with the bigger players getting bigger and bigger. And finally, I would expect even more international funds to flow in to the large conglomerates as their efficiencies of scale take over.
https://www.chicagotribune.com/business/ct-americans-dow-220...
Also, number of public companies is decreasing, with the bigger players getting bigger and bigger. And finally, I would expect even more international funds to flow in to the large conglomerates as their efficiencies of scale take over.
This is interesting, and hadn't thought about the cashing out of index funds with age. Given that idea though, the money IS being spent, put back into the economy.
The government is in a tough spot. The largest retirement asset for most people is their homes. The second largest is their 401k. With baby boomers starting to retire in droves, the government has no choice but to keep housing prices and stock prices inflated so that retirees can cash out. If housing or stock prices decline for an extended period, it would be politically and societally destabilizing.
>The largest retirement asset for most people is their homes.
That is if they actually own their homes. In Japan, large potion of current working generation can't afford to own a land and house. So the real estate is not going to be the largest retirement asset for the most people in Japan.
That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is.
That is if they actually own their homes. In Japan, large potion of current working generation can't afford to own a land and house. So the real estate is not going to be the largest retirement asset for the most people in Japan.
That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is.
> That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is.
Japan's population is shrinking as a whole but still growing in cities (especially Tokyo). You can already get a house in the countryside for free : https://inakanoseikatsu.com/category/不動産物件/無償譲渡（0円）の空き家物件/
Japan's population is shrinking as a whole but still growing in cities (especially Tokyo). You can already get a house in the countryside for free : https://inakanoseikatsu.com/category/不動産物件/無償譲渡（0円）の空き家物件/
Is this offer open to Americans or only Japanese citizens?
No. But you probably don't want to own these house anyway.
First of all, you still have to pay to the real estate agent for completing the required transaction regulation. You also have to pay tax on transaction and yearly.
Some house owner actually pay you on transaction for the hope of freeing from above yearly tax cost. They are so desperate to un-own the asset. It has practically no value yet, the tax is calculated like it had a value once upon a time.
You must also know that in Japan, you can't abandon the real estate. Once you own it, you must own it until you transfer it to the other willing to own it. It's not an asset, it's a debt, burden you for the rest of your life.
If you actually purchase these free house and pay the tax and transaction cost, it's not over. Nobody want to rent it. And you can't practically live it. If it does, it won't be sold in zero JPY.
Water, Power and Gas pipe need replacing as well as floors, walls and ceilings too.
If you repair all of these, it's actually cheaper to scrap and build a new house. It will be better by all means, it meets all the recent regulation of anti-earthquake, anti-typhoon building standard. These regulation exists because of the reasons and you don't want to live in a house that doesn't satisfy these regulation for your life.
The land itself has no value. It's located at very inconvenient places. The best case, you have to drive hours just to go to the local store. In most cases, it's located at small island so you have to use ship instead of car.
First of all, you still have to pay to the real estate agent for completing the required transaction regulation. You also have to pay tax on transaction and yearly.
Some house owner actually pay you on transaction for the hope of freeing from above yearly tax cost. They are so desperate to un-own the asset. It has practically no value yet, the tax is calculated like it had a value once upon a time.
You must also know that in Japan, you can't abandon the real estate. Once you own it, you must own it until you transfer it to the other willing to own it. It's not an asset, it's a debt, burden you for the rest of your life.
If you actually purchase these free house and pay the tax and transaction cost, it's not over. Nobody want to rent it. And you can't practically live it. If it does, it won't be sold in zero JPY.
Water, Power and Gas pipe need replacing as well as floors, walls and ceilings too.
If you repair all of these, it's actually cheaper to scrap and build a new house. It will be better by all means, it meets all the recent regulation of anti-earthquake, anti-typhoon building standard. These regulation exists because of the reasons and you don't want to live in a house that doesn't satisfy these regulation for your life.
The land itself has no value. It's located at very inconvenient places. The best case, you have to drive hours just to go to the local store. In most cases, it's located at small island so you have to use ship instead of car.
Not really free and there are strings attached. But a great deal if you qualify and really want to live there.
https://www.rethinktokyo.com/free-houses-japan-countryside
https://www.rethinktokyo.com/free-houses-japan-countryside
They are very cheap costs for the size of the house.
I think the real “string” is economic, which is the reason these houses ended up abandoned in the first place. They’re almost entirely in places with fuck all going on.
I think the real “string” is economic, which is the reason these houses ended up abandoned in the first place. They’re almost entirely in places with fuck all going on.
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I enjoy defending capitalism; I think the principle of funneling resources to people who create more resources is sensible.
It needs to be underscored that whatever this is, it isn't capitalism. Exactly which -ism it is I know not; but it is a terrible idea.
Central banks interfering in markets can only be to raise prices long-term. They aren't going to interfere to drop prices, the political pressure is unbearable over the medium term. I'l jump to the American Fed because I know a bit more about it - they haven't been able to sustain interest rate rises in my lifetime [0], there is a very clear downtrend.
This sort of activity in turn disables all the signals used to vent incompetent companies from the system. A direct result of these policies by the BoJ will be companies that take in resource, and churn out value that is less than the inputs. It is unsustainable, stupid and destructive. There are no excuses for it.
I lump the US Fed's QE programs into the same basket, but at least they muddy the waters enough that the links aren't obvious to a neutral observer. The Bank of Japan's activities are sick.
[0] https://tradingeconomics.com/united-states/interest-rate
It needs to be underscored that whatever this is, it isn't capitalism. Exactly which -ism it is I know not; but it is a terrible idea.
Central banks interfering in markets can only be to raise prices long-term. They aren't going to interfere to drop prices, the political pressure is unbearable over the medium term. I'l jump to the American Fed because I know a bit more about it - they haven't been able to sustain interest rate rises in my lifetime [0], there is a very clear downtrend.
This sort of activity in turn disables all the signals used to vent incompetent companies from the system. A direct result of these policies by the BoJ will be companies that take in resource, and churn out value that is less than the inputs. It is unsustainable, stupid and destructive. There are no excuses for it.
I lump the US Fed's QE programs into the same basket, but at least they muddy the waters enough that the links aren't obvious to a neutral observer. The Bank of Japan's activities are sick.
[0] https://tradingeconomics.com/united-states/interest-rate
A very similar argument was presented by Andy Haldane of the Bank of England, discussing the reasons for stagnating productivity in the UK.
Centrally controlled misallocation of public resources on a large scale. A particularly nasty form of Socialism.
It works for China.
No it doesn't. It was the root cause of the Global Financial Crisis in 2008, and will be the root cause of the next financial crisis which is definitely coming. It doesn't work.
The root cause of the 2008 GFC was improperly risk rated mortgage backed securities and associated credit default swaps, not China’s central economic planning.
Your brain isn't working too well today. Try reading the original comment that you replied to. Centralized misallocation of public resources is the root cause. The banks took insane risk only because they knew they would be bailed out by taxpayers money, which is a forced redistribution/misallocation of public resources.
The final straw is not the root cause.
Funneling resources to people who create more resources does make sense, provided the assumption that those specific individuals are the key ingredient to the resource creation.
From what I understand, the people you defend capitalism from tend to assume that those individuals themselves are less relevant than is their place in the larger system.
Does this summary of the arguments line up with your experience?
From what I understand, the people you defend capitalism from tend to assume that those individuals themselves are less relevant than is their place in the larger system.
Does this summary of the arguments line up with your experience?
Genuinely productive people are pretty rare (1 in 100 type numbers). I can't claim to know exactly what a debate opponent is thinking, but usually I assume:
1) Most people are more involved with the famous and common 'bullshit jobs' instead of the much fewer super-productive jobs - like a couple of farmers who can feed orders of magnitude more people than just themselves. Maybe they haven't interacted with the parts of the economy that do genuine wealth-creation and don't understand it.
2) They don't accept that incentives matter more than inherent nature, so they believe the productive will continue producing even if the incentives to do so are reduced, so resources can be redirected to 'those with needs'.
The second is a pretty defensible position, although obviously I disagree most of the explicit and implicit assumptions.
As an aside, this has already become one of my fastest down-voted comments. Could someone stop by and explain what they don't like about it? I didn't think it was very inflammatory.
1) Most people are more involved with the famous and common 'bullshit jobs' instead of the much fewer super-productive jobs - like a couple of farmers who can feed orders of magnitude more people than just themselves. Maybe they haven't interacted with the parts of the economy that do genuine wealth-creation and don't understand it.
2) They don't accept that incentives matter more than inherent nature, so they believe the productive will continue producing even if the incentives to do so are reduced, so resources can be redirected to 'those with needs'.
The second is a pretty defensible position, although obviously I disagree most of the explicit and implicit assumptions.
As an aside, this has already become one of my fastest down-voted comments. Could someone stop by and explain what they don't like about it? I didn't think it was very inflammatory.
I'm starting to question if the rich are not overvalued because as more and more money is being shoved into their pockets I have one thing to ask. Where's the economic miracle?
Not only are everyday people poorer but GDP is stagnant. From a western perspective the rich got a ton of raises and failed to deliver. We have countries with negative birthrates and people living in smaller homes with more food insecurity. Central Banks have been doing their best to raise prices and keep the rich afloat yet I don't see the big economic miracle.
Prehaps the source of their wealth is not productivity but good old fashioned power dynamics? What value are the rich providing to most people exactly? Wonderful new technology? That's pretty neat but what else do they have to offer?
Not only are everyday people poorer but GDP is stagnant. From a western perspective the rich got a ton of raises and failed to deliver. We have countries with negative birthrates and people living in smaller homes with more food insecurity. Central Banks have been doing their best to raise prices and keep the rich afloat yet I don't see the big economic miracle.
Prehaps the source of their wealth is not productivity but good old fashioned power dynamics? What value are the rich providing to most people exactly? Wonderful new technology? That's pretty neat but what else do they have to offer?
> Genuinely productive people are pretty rare (1 in 100 type numbers).
That may be true in bullshit heavy fields. When it comes to actual labor though the figure is closer to 99 in 100. Unproductive plumbers just aren't going to last very long.
Also you're getting downvotes because you're ambiguously questioning the merits of socialism. But you already knew that.
That may be true in bullshit heavy fields. When it comes to actual labor though the figure is closer to 99 in 100. Unproductive plumbers just aren't going to last very long.
Also you're getting downvotes because you're ambiguously questioning the merits of socialism. But you already knew that.
Capitalism has become pretty controversial lately, so if I had to venture a guess I would say that's likely why.
Can I ask why you put quotes on 'those with needs'?
Can I ask why you put quotes on 'those with needs'?
It is language that leads to hot debate and that I don't personally like. I wanted to keep it isolated from the rest of my paragraph because it isn't my frame, it is the frame of people I don't agree with.
I assume you're alluding to: "From each according to his ability, to each according to his needs."
The last time Capitalism was this inequal it led to communism and fascism with fascists chiding that their ideological enemies were "plutocracies".
I honestly don't think this will fix itself until we face great depression 2. When the government is no longer able to bail out the rich because they will have accumilated so mamy resources that nobody will be able to save them from self-imposed financial peril.
I honestly don't think this will fix itself until we face great depression 2. When the government is no longer able to bail out the rich because they will have accumilated so mamy resources that nobody will be able to save them from self-imposed financial peril.
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Depending on field productivity is insanely top-weighted. Take the Music Industry. The Beatles produce incomprehensibly more profitable content than your local garage band. Their value isn't merely a result of capitalism too. Even in a non-capitalistic system they would be highly valuable musicians.
One phenomenon that's been happening is the increasing top-heaviness of society due to automation because you simply need less people to work. The value of labour has plummeted for other reasons as well such as mass immigration and the workforce increasingly incorporating women.
One phenomenon that's been happening is the increasing top-heaviness of society due to automation because you simply need less people to work. The value of labour has plummeted for other reasons as well such as mass immigration and the workforce increasingly incorporating women.
Partially off topic: if the US Fed bought publicly traded equities, would we know about it?
It'd be a conspiracy theory, but one that was unlikely rather than crazy.
There is evidence that foreign central banks are active in the US markets though [0].
[0] https://www.cmegroup.com/company/membership/files/CBIPFAQ.pd...
There is evidence that foreign central banks are active in the US markets though [0].
[0] https://www.cmegroup.com/company/membership/files/CBIPFAQ.pd...
Why is that a "conspiracy theory"?
Somewhat related, it's entirely possible that someday social security will be revamped to include equities similar to how Canada runs its pension plan.
The ideal time for this would be once the current house of cards world economy collapses. Could be 10-15 years off yet.
The ideal time for this would be once the current house of cards world economy collapses. Could be 10-15 years off yet.
[deleted]
If the companies they buy end up making money, might this be an interesting alternative to taxes as a way to fund the government?
[deleted]
Corporate profits come from somewhere. It would be a switch from an income tax to a (hidden) federal consumption tax.
The initial money to pay for stock has to come from somewhere, and that somewhere would be more debt or traditional taxes.
The federal government would control the companies (assuming it acquires majority shares), even if government employees aren't staffing them. That's socialism.
Socialism/communism is bad because if given the opportunity for direct control, government can't help tinkering in business affairs to score political points, rather than because it makes the business better.
The initial money to pay for stock has to come from somewhere, and that somewhere would be more debt or traditional taxes.
The federal government would control the companies (assuming it acquires majority shares), even if government employees aren't staffing them. That's socialism.
Socialism/communism is bad because if given the opportunity for direct control, government can't help tinkering in business affairs to score political points, rather than because it makes the business better.
Other than raising the money, that doesn't seem too hard to solve. The Federal Reserve could buy index funds and be a passive investor like everyone else.
I'm reminded of Matt Levine's running joke (?) about whether or not index funds are socialism.
I'm reminded of Matt Levine's running joke (?) about whether or not index funds are socialism.
https://www.businessinsider.com/who-actually-owns-the-stock-...