Video: A Bleak Long-Term Economic Picture for Japan?

Predicting the Land of the Rising Sun's future is a complex undertaking, and many a financier has had both their belt and suspenders handed to them from betting on Japan's economic implosion.

I'll admit up front that I don't have a ready prediction that X will happen by Y date. But here are some of the macro elements to keep in mind:

1. Japan is a major surplus country, meaning it produces and sells much more than it consumes. Much of the savings the country generates, which have to go somewhere, have been invested at home in Japanese Government Bonds (JGBs) and abroad in U.S. dollar denominated assets. Alongside China, Japan is the second largest holder of U.S. treasury debt with as almost $1 trillion in holdings.

2. While Japan has a breathtaking 200%+ public debt/GDP ratio (the highest in the developed world), 94% of that debt is Japanese owned. What this means, basically, is that so long as the Japanese keep buying JGBs then Japan's fiscal future is in its own hands. In contrast, the U.S. depends on foreigners to finance a large portion of its federal deficit. The thrifty Japanese save enough to finance their Keynesian stimulus policies all by themselves and still have plenty left over to spot Uncle Sam!

Now, the Japanese savings rate has been steadily declining to what would seem an unsustainable level in terms of maintaining the current fiscal course.

Continue reading the full article published on SeekingAlpha here.

Podcast: The Immortalization Commission - Science and the Strange Quest to Cheat Death

Link to podcast here.

During the late nineteenth century and early twentieth century science became the vehicle for an assault on death. The power of knowledge was summoned to free humans of their mortality. Science was used against science and became a channel for faith.

John Gray is most recently the acclaimed author of Black Mass: Apocalyptic Religion and the Death of Utopia, and Straw Dogs: Thoughts on Humans and Other Animals. Having been Professor of Politics at Oxford, Visiting Professor at Harvard and Yale and Professor of European Thought at the London School of Economics, he now writes full time. His selected writings, Gray’s Anatomy, were published by Penguin in 2009. The Immortalization Commission: Science and the Strange Quest to Cheat Death is published in February 2011.

Does Capitalism Depend On Population Growth?

Sometime in 2011 the world's population is projected to pass 7 billion.

However, if current trends in birth rates hold eventually the planet's population will top out around the year 2050. Does the survival of capitalism, as PIMCO's Bill Gross recently speculated, depend on population growth?



Courtesy of The Economist.

Bill Gross to Government: Quit "Flushing Money Down the Toilet"

PIMCO's Bill Gross, often referred to as "The Bond King", today published his August investment outlook which outlines the economic headwinds (past, present and future) due to slowing population growth.

For anyone not familiar with Gross, he and his colleagues at PIMCO run the world's largest private bond fund with over $1 trillion in assets under management. The U.S. Government sells bonds to finance its deficits, and Gross and PIMCO are big (maybe the biggest?) buyers of those bonds. Put simply, when Gross/PIMCO talk government listens. But don't just take my word for it. Ask Clinton campaign manager James Carville, who had the following to say:

"I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everyone."

Deep Demographic Doo-Doo

Recent demographic forecasts suggest that world population growth will continue to slow and level off around 2050 and then begin to decline.

Should this occur it would be difficult to overstate the implications. As Gross puts it "capitalism itself may be in part dependent on a growing population".