When industrialization comes to town, immense social changes are unleashed. In particular, women cease being chattel and become their own agents. Women’s rights rises. The ZIRP system the US has embraced has tremendous dangers. Denninger has noticed what I have explained in the past: the US is now, thanks to being a ZIRP banking system, is now a carry trade tool! This will cause us to unwind exactly like Japan did after its immense credit bubble. Today, I want to expand on the social implications of all this, as seen from within families in Japan and the US.
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Can Japan Avoid Another Lost Decade? – Forbes.com
Japan’s Lost Decade might thus be more aptly called its “Lost Decades.” The sharp economic slowdown of the early 1990s culminated in a recession in 1998-99, only to be followed by another near decade of recessions and paltry growth. Being the most trade-dependent of major industrialized nations, Japan suffered the worst GDP contraction among these countries in first-quarter 2009, and is on track to perform the worst of the G-3 in 2009. Aggregate demand slid precipitously, and deflation took hold once again, despite massive fiscal spending and monetary expansion. My analysts and I project Japan’s recession will persist through 2009, then give way to gradual recovery in 2010.
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Though the pace of economic contraction has slowed since first-quarter 2009, the inventory-driven rebound in production and exports will at best make for stabilization at low levels, rather than a strong economic expansion. Japan’s recovery will hinge on external demand from the U.S. and Europe–the main final consumers of Japanese goods. Chinese demand, which helped boost Japan in 2005-07, may be of little help this time. China is the top destination for Japanese exports, but Chinese demand is mostly a function of U.S. and European demand. Most Japanese exports to China are inputs for goods bound for the U.S. and Europe, not finished goods bound for Chinese retail stores or raw materials needed for infrastructure projects.
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Forbes magazine supports ‘free trade’ very aggressively. But even while doing articles like this one, the magazine cannot put 2+2 together and see the DANGERS of ‘free trade’. Japan is the world’s #3 economy now that it was displaced by China which will be #1 in another 20 years or less. But Japan isn’t #3 in consumption. The Japanese people consume less and less and less and those who used to own cars are not owning cars anymore and everything is being reduced drastically.
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The major reduction in Japanese consumption is all things that revolve around building a family: buying a larger home, buying things and services for the children, setting up the children so they can leave the home. Instead, this is all imploding. As the childbirth rate collapses towards zero, families cease expanding and begin disintegrating. In the case of Japan, women are divorcing men more and more and instead of remarrying, like in the US, they often live alone with their sons and increasingly, their daughters.
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Japan is trapped in a perpetual ZIRP system. Zero interest rates are not a wonderful thing. It kills incentive to save money via handing it over to banks who then make the money grow by lending it out and then sharing the interest accrued with the savers. Instead, it makes more sense to put money under the mattress. Or ship it overseas. And this is the Japanese carry trade: desperate Japanese wanting to make some money via a bank lending money, sending their savings, en mass, overseas.
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Continued>>>
http://emsnews.wordpress.com/2009/07/23/zirp-leads-to-social-collapse-of-families/#more-4707
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