The Japanification of the West

The Japanification of the West continues — high debt, low growth, and low yields — as treasuries plumbed record lows this week. Felix Zulauf weighs in on same in Barron’s, saying the following:

Providing liquidity isn’t the solution, but if we don’t do it the system will break down. Providing growth is a difficult task. I don’t know how to do that. Long-term, we have begun the Japanification of the Western World. If we are unable to bite the bullet, our problems will grow bigger. Eventually, after many years, some central banks and governments might lose their nerve and go completely in the wrong direction, ending up like Zimbabwe.

As circumstances would have it, Richard Koo of Nomura has out a new report on Japanification. Here is a residential real estate graph from Koo’s report:



  1. Why not extend the graph 11 more years and leave the index futures off? The implication would be obvious.

  2. Li'l Antinee says:

    What a complete laugh.

    This is a utter nonsense. A 10 year old could line up two graphs.

    Japan is nothing like the USA. The problems, like the culture, are not comparable. Has Felix Zulauf even been to Japan?

    And as far as Richard Koo goes, I can hardly think of a more incompetent economist. Everything he says is wrong.

    If you want to know what’s going on in Asia, read Andy Xie.

  3. Paul,

    Richard Koo's discussions around Japan are like someone with a cold talking about their dripping nose, but not addressing real issue, a viral infection. Agreed the nose is dripping… but…

    For Japan in the 90s to today, their issue is having a mercantilist economy. This is not a characteristic of the North American economy, we use comparative advantage to it's advantage, and don't expect to make toasters. New American products are dominating the world, Google, Apple, Facebook, Android, the list goes on. Japan did a good job at improving some products (Sony's Walkman improved the transistor radio, unibody construction in cars), but even in the 80s was never as dynamic as America today. We lay people off in one place… hire them where they are needed. Japan did no such thing. Japan made their mark in the 80's… at the same time as America was figuring out personal computers.

    I'm not suggesting Koo's policy suggestions are wrong. But the extrapolation is incorrect. America is recovering from a recession, no doubt, but malaise? Have you tried Apple's OX Lion? Malaise? Really?

  4. gregorylent says:

    time to consider economic values which ignore "growth".