By Brendon Harre*
I wonder if the global collapse in interest rates and the spectre of deflation is a reflection of the collapse in expectations for future generations in the developed world; that a process of restricted supply and declining demand is the true cause of stagnation and deflation, with inter-century low interest rates being the desperate policy response to this predicament.
In many countries opportunities for the young are not what they once were.
In much of the world youth unemployment is high even for those educated in areas which once guaranteed entry into middle class-dom.
Generation Rent
In some regions housing costs have escalated creating Generation Rent.
Some socially conservative societies like Japan, Italy and Germany have not been flexible enough to reconcile progressive social movements like gender equality in the workplace with cultural expectations regarding motherhood and childcare.
In response their young have gone on a reproduction strike.
Birth rates have fallen to levels, which if continued, mathematically guarantee the collapse of the societies concerned.
Immigration has often been the policy response to the associated labour and skill shortages, but that is a band aid, not a cure for the loss of hope.
EU struggling
In Europe the post war EU unification project has struggled to add new members and adapt to a common currency in the post GFC economic environment.
The overarching theme is that in many places our political elite has not being able to articulate a positive vision for the future.
Some people welcome this loss of hope.
There is much publicity about what ‘growth’ and our capitalist system has done to the environment.
In fact there are many on the green fringe of our political spectrums who argue that the current global crisis is not a failure of vision, leadership, institutions and society.
Reached the limit
They argue that growth has reached its environmental limits. That we have overshot our resources and we will now fall off the cliff into permanent decline.
These green fringe beliefs have contributed to the spread of growth containment beliefs and policies throughout the developed world.
There has been much debate about whether the resulting increase in house prices, declining quality of housing with respect to its location, size and weather tightness (its ability to be warm and healthy –not humid, leaky or mouldy) and the pricing out of the poor from decent housing is a symptom of growth containment policies or a symptom of the coming environmental collapse.
Some people deny there is a loss of hope. They are heroically optimistic.
Economic commentators such as Bernard Hickey have said such things as: “There is a growing body of thought that cheap and powerful new technology such as smart phones, ageing populations (?) and the globalisation of services are driving prices down all around the world in a way not seen since all of the 1800s, when the first age of industrialisation created regular deflation and interest rates were typically around 3%.”
Failed logic
Taking an optimistic approach to life is understandable but in this case it really fails the logic test.
The GFC started with the collapse of the real estate prices of the high median multiple markets in the US, which threatened the global financial system following the bankruptcy of Lehman Brothers.
Pre GFC only the inelastic cities boomed in prices and post GFC it has been the elastic cities' ability to expand without setting off another asset bubble that has allowed a recovery of sorts in the US.
Although there are some bubbly inelastic US cities now, it seems most US residents have learnt to relocate themselves to more affordable cities, rather than taking on dangerous levels of debt.
Fundamental error
If one assumed that deflation was a beneficial structural problem, then the likes of the Swedish Riksbank is making a fundamental error in lowering interest rates below zero to fight deflation, unemployment and a high exchange rate, when it should be using higher interest rates to fight their housing bubble.
The global financial crisis has led to an extraordinary policy response of quantitative easing, which is a fancy word for money printing.
The intended first beneficiary of this money printing is the banking system. Banks that have created money by issuing private debt –mostly mortgage debt in an unsustainable manner, have needed to be rescued by State controlled Reserve Banks to re-capitalise the banking industry.
The intention was that once the banks were re-capitalised, normal borrowing, economic activity, inflation and interest rates would result.
Somehow the transmission mechanism between the financial industry and the real economy has broken down because seven years after the 2008 Global Financial Crisis, deflation and multiple-century low interest rates are present in much of the world.
Today’s response to the Global Financial Crisis is in marked contrast to The Great Depression as explained by Professor Crafts:
...Obviously, for the cheap-money policy to work it needed to stimulate demand – a transmission mechanism into the real economy was needed. One specific aspect of this is worth exploring, namely, the impact that cheap money had on house-building. The number of houses built by the private sector rose from 133,000 in 1931/2 to 293,000 in 1934/5 and 279,000 in 1935/6 – many of these dwellings being the famous 1930s semi-detached houses which proliferated around London and more generally across southern England. The construction of these houses directly contributed an additional £55 million to economic activity by 1934 and multiplier effects from increased employment probably raised the total impact to £80 million or about a third of the increase in GDP between 1932 and 1934…
...Houses were affordable to an increasing number of potential buyers. 85% of new houses sold for less than £750 (£45,000 in today’s money). Terraced houses in the London area could be bought for £395 in the mid-1930s when average earnings were about £165 per year. Houses were cheap because the supply of land for housing was very elastic which in turn meant that there was no incentive for developers to sit on large land banks. Underpinning the availability of land for house-building was an almost complete absence of land-use planning restrictions which applied to only about 75,000 acres in 1932 – the draconian provisions of the 1947 Town and Country Planning Act were still to come…
There is rising level of debate among experts worldwide on whether the growth of the financial industry has been socially beneficial.
New Zealand has been part of this debate with Phil Hayward’s extensive comment being accepted as a response to one of these article’s in VOX’s CEPR's Policy Portal which has research-based policy analysis and commentary from leading economists.
There is also debate about whether the capitalist system leads to an inevitable accumulation of capital wealth in the hands of the relative few –the 1%. Joseph Stiglitz indicates this story of wealth accumulation is more a story of real estate rather than productive capital. Here are his words:
I think most readers of Thomas Piketty’s book (Capital in the Twenty-First Century) get the impression that the accumulation of wealth — savings —is responsible for the rise in inequality and that there is, therefore, in a way, a link between the growth of the economy — the accumulation of capital— on the one hand and inequality and wealth. My paper begins with the observation that in fact, you cannot explain what has happened to the wealth/income ratio by that analysis. A closer look at what has gone on suggests that a large fraction of the increase in wealth is an increase in the value of land, not in the amount of capital goods.
All this discussion of finance, real estate, inequality, Reserve Bank policy and underlying belief systems is mostly over the heads of the wider public.
It takes a lot of effort to build ones knowledge up enough to understand the arguments, let alone have an informed opinion on the best way forward. Added to that there isn’t a clear consensus from the experts on what direction to go.
I believe it is imperative as a society that we ‘the public’ make an effort to inform ourselves so we can articulate a collective positive vision for the future to counter the loss of hope - which in my opinion is underlying cause of our problems.
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Brendon Harre is a reader and commenter on interest.co.nz who says he studied some university economics before embarking on a career was in psychiatric nursing. He lived in Finland until recently, where he retrained as a cook, then spent some time at home looking after two preschool boys before more recently returning to work as a psychiatric nurse in Christchurch.
42 Comments
Wishful thinking got us into this mess, I don't think wishful thinking can get us out. The default view from the media is laden with optimism, so it's not like we are lacking a good vision of the future. If you go through the stages of grief where you end up is not hope but acceptance. First though you need to get through denial, anger, bargining, and depression. To even get there though you actually need to reach a conclusion of what the predicament is, and there isn't even a consensus that we are in a predicament, let alone what the causes are. For a basic outline I recommend the crash course by Chris Martenson (online). It covers the convergence of energy, the economy and the environment.
Over 400 years of industrialisation, all so the average worker can have less days off, and a more stressful work environment then a medeval peasant. No wonder people have lost hope LOL.
"I wonder if the global collapse in interest rates and the spectre of deflation is a reflection of the collapse in expectations for future generations in the developed world; that a process of restricted supply and declining demand is the true cause of stagnation and deflation, with inter-century low interest rates being the desperate policy response to this predicament."
Brendon... The short answer is NO....
The GFC and post GFC is a deleveraging phenomena... It was the culmination of 50 yrs of Credit growth... thou one of the effects is a drop in aggregate demand... of course.
It is no different to a household that has led an indulgent lifestyle by borrowing to m the max. on various credit cards ..and wherever they can... Now they have to pay those debts back ...or at least down to a sustainable level.... (Obviously they have to consume less... spend less)
At a National level.... Soveriegn Govts. , with their Central Banks can use interest Rates and also by printing money ..( which is how they keep interest rates low).... to help with the deleveraging process... When I say help... I mean they try to manage the deleveraging process.... Without their intervention... deleveraging would be a very painful deflationary implosion ..resulting in a deep depressions... ( at least it gets it over with ..? ) ... Ray Dalio writes about ugly deleveragings and beautiful deleveragings..
Gary Shilling and Ray Dalio are a couple of guys I follow..... they are very good ... They both agree that it is a decade low process , in which we have sub normal growth.... 5 more yrs to go... they say..
http://www.economicprinciples.org/
https://www.youtube.com/watch?v=37Z7j66DCZM&index=43&list=PLtbNXv8-QR53…
http://www.amazon.com/Age-Deleveraging-Updated-Investment-Strategies/dp…
Great article Brendon,..... I agree with most of it..... the Policy response to the GFC has accelerated a HUGE transfer of wealth.... in their attempt to save the Financial sector.
I believe it would have been far more equitable to use QE money (printing ) and pay it out to every adult as a universal wage. Giving it to the banking system has created HUGE inequity.. in my view.
Id also say that it is the form of Capitalism that I call "Credit Capitalism" that has lead to the accumulation of Capital in a few hands.... the main reason for that is that is is the Private banking system has the "licence" ... to grow the money supply by creating credit out of thin air.... This has been the principal reason for the huge growth in the FIRE economy.... over the last 50 yrs... Financial sector walks hand in hand with the Real estate sector..
AND...as we can see now... it is a "No loss" proposition for the Banking system.... when they have inpaired loans that puts the system at risk.... they get bailed out.. Suely...only idiots would have leant Money to Greece...??? and those idiots are being saved .. and rewarded....
Great article Brendon...thks..
Roelof and skudiv I know am a psychiatric nurse but this essay wasn't an attempt at global grief counselling. It was an attempt to inform the public of important events that are happening in various parts of the world so they could 'orientate themselves to reality' and then we can work out a way forward. Roelof I think you need to be careful in creating a mental model of the global economy which reduces it down to a 'household'.
" Roelof I think you need to be careful in creating a mental model of the global economy which reduces it down to a 'household'.
I used to think that Brendon..... but after 30 yrs of following economic events and reading... I think it is useful to use the model of a "household"...or an "island".... in helping to understand things.... If Anyone borrows beyond their ability to service the debt.... the implications are the same....dont u think..??? Nation or household.. It isn't rocket science.
Why do u think I need to be careful...???
Also... My view is that unless one understands ist principles..... then how can one orientate oneself to reality...???? I hold to my view.. :)
Grief Counselling... are u available Brendon....
Galbraith sums it up....
The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.
All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy by real assets.
All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment
Roelof I think this problem is bigger than the finance system although they are certainly part of the problem. They have foisted vast amounts of debt onto the public that you rightly say is unsustainable. I think we should be looking outside the finance industry for solutions.
Its not just the financial system... It is also the Global Monetary system... It is structurally Flawed...
It was never intendeded that Countries could run chronic current acct deficits...or that some countries could run chronic current acct surpluses...
A lot of your discussion is about wealth..about affordability.... which takes me to "Money"..
(Your headline is about the global collapse in interest rates..and deflation)
Money is the core fundamental ist principle...
Let me ask u this... If I could counterfiet Money... what would happen....???? How much wealth could I appropriate...???
How would my actions impact my Local economy.?? impact the wider economy..??
Who would be the initail beneficary of my money printing..??? Who would be the longer term loser..?? Would it lead to "wealth for all".... or a huge division of wealth..??
There is no such thing as a free lunch...
A great question to ask is.... Why are Banks allowed to create credit..??
Why r we still using a structurally flawed Monetary System.??? ( AND... if we know it is flawed...why do we allow unfettered foriegn direct investment into NZ )
With the death of Bretton Woods.... we have crippled along in regards to having a proper Global Monetary system.... ( A world of fiat money )
I've got lots of questions...
Roelof I have some sympathy for the argument that the whole global monetary/exchange rate system is rubbish. It certainly doesn't seem to be doing what 'experts' claimed it would do when promoting the likes of floating exchange rates in the 1980s.
But my argument is that this 'loss of hope for the future' problem doesn't have a single cause or a single solution. Reforms if they come will come in a broad front. Maybe they will involve something like Bretton Wood, maybe it will be more national and local responses like what Professor Crafts describes happened in Britain when they needed to escape the Great Depression.
I think it would be foolish for a small country like NZ to succumb to a conservative 'status quo' while waiting for some grand global coilition to undertake reforms that may never happen and may not be much of an improvement anyway.
There is a global funk that for various reasons -demographic decline, politics -the failure of European unification, housing bubbles caused by growth containment policies etc. The symptoms of this funk is deflation. The policy response is inter century low interest rates and in some cases money printing. This has been tried for seven years without success.
I think the solutions will come from political, cultural, institutional changes that address the global funk so future generations have hope, opportunity etc.
Can you please give examples of 'growth containment' policies? Which governments are persuing such programs?
Re; demographics - global population is still expanding by +80 million a year (the UN recently raised its 'low' population estimate - http://www.worldwatch.org/node/6038), and predict at least another 2 billion by 2050 so I assume you are talking about nations in isolation rather than globally?
"The symptoms of this funk is deflation."
No, its a symptom of not enough NET cheap energy to continue growing and the World's economy has to grow to work.
"the solutions will come from political, cultural, institutional changes that address the global"
yes, but many a) dont agrre or see we have an issue, b) what the issue is, c) if there is or what is the solution.
Thanks for clearing that up. Getting informed is the key, actually having a good bullsh!t filter is good start. It's surprising to me how many people think we can have our planet and eat it too, or they don't think they just say things like "they'll think of something."
If one assumed that deflation was a beneficial structural problem,
Here is an example of understanding 1st principles....
Deflation as a result of productivity gains is a good thing...it is benign deflation , and results in a better standard of living for all... ( The computer industry is a great example of this).
Deflation that results from a destruction of Credit is an entirely different thing... Credit spends like Money... in fact it is fungible... it is money.
A massive destruction of Credit results is a Massive contraction of aggregate demand.... as well as a destruction of the Banking system...
That is what happened with the GFC.... arguing that the deflation we are going thru now is some kind of beneficial structural problem.... completely leads one down the garden path... in regards to understanding the issues....
Just my view .. of course... AND ..I'm not trying to be critcal... I'm just trying to contribute my own understanding... and I've learnt heaps from reading what u have written over the last few yrs.... I'm not having a go at u ...Brendon.
The computer industry has been horrific. Back when I was retailing computers the government made more margin than we did. And we had to compete with big stores with there hyped prices but 5yrs "interest free" - their products were far inferior to ours but we required 30-50% deposit, and cash'n'carry so they got a lot of the gimme now market (which also happens to 90+% correlate with the low end market (ie it's a subgroup relationship).
This is because any time anyone bought a machine a better OS or more speed or latest processor was just around the corner, and with software that used those latest upgrades.
The "productivity deflation" was enough for many buyers to become esaperated and reverse to be on the technology rollercoaster and the xIO team became devalued with it, as the devaluation of existing product forced them into a commodity situation.
It has reached a point where we have some awesome technology (eg the dual GTX i790 cards in this i7 box) but a very real problem that some of these companies won't be around next year. they deal big money, but I have problems pushing the limits of this technology, why upgrade? I don't want to upgrade my iPad 2, it does what I want; the latest models are more hassle to use (like Vista vs Win2000). so what are those companies doing for revenue? What are they going to keep paying engineers and sales people to design and sell? What model are they going to use to roll out updates, fixes, support functions?
The IT industry has always been a kid leaning over a cliff to see how far they can go.
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Whereas credit devaluation.
How much can you keep borrowing. Richard K's "Cashflow" computer game illustrates it well. Buy the 40 unit apartment block and you're set for the big time. But use to much credit before you have enough other passive income to dovetail into it, and the interest will eat you alive. The only "out" is dump the liability, usually at a big loss; one that will probably cost you the game.
So how much can you keep borrowing?
With farming even with the lowest payout we had people claiming they were still making profits. They were completely deleveraged and only had drawings not full wage bill so even at the worst times they were still in the black. It didn't matter what the OCR was or what the bank rates or even the exchange rate was they had minimal exposure.
So what is the correct leverage rate? how is it linked to interest rate pricing?
is 120% of assets to much at 8%, that's where I came in at.
is 40% credit use, good working capital level, considering our price competitive market is that survivable in a business downturn, when wages and interest become difficult?
Clearly it should be the ambition of a company that wants to stay around, that it needs to reduce exposure - so that means deleveraging - right?
So what does credit devaluation really mean to a company that wants to reduce interest rate exposure?
Why upgrade? indeed as you say 10~15years ago the tech was getting better so fast an upgrade was 'essential" These days no. This 4year old machine I just bought off work for $200, I put a brand new gold 600w PSU in it for $150 and I'll buy a new graphics card for it sometime soon at around $400~600 (960 or maybe a 970), it plays everything I play. My second computer is 6 years old cost $320 2 years ago, I did the same sort of upgrade (AMD 270X) it plays eveything my kids throw at it at 60~90fps at 1920. A new computer would touch $2k, for no better game enjoyment.
Then there is virtualisation, we have 3+TB of ram and I dont know how many cores running loads that took 400+ servers a few years ago now in 3 racks....(plus storage). HP, Dell etc must be very badly effected in sales.
Next is the cloud, small busineses must be rejoicing, little IT skills needed.
I now have unlimited broadband for $60+ less per month than my 150gb plan cost me 2 years ago.
My iphone plan is $29 a month for more than I was geting at $40 a month 18months ago.
This is (I hope) good deflation, but you cannot eat the above. So the younger ppl who tend to spend a bigger % of their salary on these are seeing benefits, 50+? not so much, OAPs? probably not at all, essentials are not so down.
"They were completely deleveraged" so am i almost, I have a small residual mortgage, that makes a huge difference to us monthly. I pay around $300 a month for about $30k while others with a $300k mortgage are paying $3k a month, no wonder wifes have to work full time. In a downturn who is out of the "game" first? The FHB and they are a big enough % that their default will impact the likes of me anyway.
Good article, Brendon.
A completely alternative theory as to the 'global funk' you espy, is offered in the 'loss of faith' narrative from the likes of David P Goldman ('Spengler' in Asia Times and at PJ Media).
Hard to swallow by those of us who have eschewed the ol' time religion in favour of secular rationality, but mebbe the man has a valid point....
Full disclosure, I have all his books. Plus, as counter-balances, Sam Harris, Alain de Botton, Mark Steyn, Peter Ackroyd, and many others. There's grains amongst the chaff, everywhere.
Brendon a fact I have quoted here regularly, and is available to anyone from the US Census Bureau, is that the world population grown is declining at an accelerated rate. It has been since 1961.
When plotted it is making a very nice Seneca or Sigmoid Curve.
I wonder when simple mathematics became a green fringe subject. Perhaps therein lies the problem?
It really isn't to big a stretch in thinking to get from declining population rates to declining energy per person.
human beans are suppose to have sentience and intelligence.
this means they can recognise the impending doom and choose a different path.
Trick to it is that feedback loop. The butterfly.
Where are the feedback loops occuring, what is stoppng them clamping down as resources reduce.
A classic example is the credit extension and expansion of sovereign credit limits.
Interest charged is a feedback system, I borrow $X from lender, I get $X - interest, to spend into the economy. The interest is teh feedback loop. Without the interest I (or Greece) can borrow forever, just as banks and medeval gold murchants could against future promises.
But when the loan maker has to borrow to make the loan, then we start to seal our fate, because someone is relying on my spending that $X to keep things perpetuating.
With a reducing population, or if the population stops borrowing (eg delveraging, runs low on credit) then the amount of $X reduces, but the feedback loop which is the loan makers banker still wants their cut. That gives you the Seneca effect.
Or if someone lends a sovereign country more than 100% of their revenues, then it's like the emergency credit card bill that we couldn't pay last week, so this weeks emergency is worse (and more common due to shortage of unspending disposable income). The sovereign country rapidly finds it can't afford development, it's interest cost (bond rate) gets less favourable, or its stupid enough to sell earning assets (at a loss). then the feedback is worse - that's why government austerity (deleveraging is so critical)... but if the feedback system is high (and the credit providers have got their talons in deep) then again we get a Seneca curve (using through devaluation so less visible - we start seeing product sizes getting smaller eg Cadbury, rather than prices going up, as the upward prices will show up in inflation and Cost-of-living surveys that don't measure volume of bread or weight of chocolate, only checkout prices.)
"human beans are suppose to have sentience and intelligence.
this means they can recognise the impending doom and choose a different path."
really? who told you that?
Just two subjects, climate change and peak oil.
damned if I can see much sign off it, more like lemmings.
I mean we have bred to the point that we need massive fossil fuel input to support our food production and yet that oil output per day is about to drop and keep on dropping until 2050 when effectively its all gone. Meantime we are expecting 9billion mouths to feed by then.
Please explain to me how that is going to work cause Im f**ked if I can see how.
Then there is water, so many places eg china seem to be close to their water limit. eg china has already drawn down its water table so far in some parts that its un-economic to pump it out so they have gone back to dry farming techniques, result a lot less output.
Then there are the other essential raw materials inputs, also expected to be exhausted within a few short decades.
Pakistan has 5% of its woodland left, yet uses large quantities of wood for cooking.
Please explain just how this doesnt get really ugly and in our lifetimes.
lots of people keep telling me that.
According to them humans are sentient, intelligent and capable of thinking and that's what separates them from animals. Animals react to stimuli (seeing food, seeing a mate, fear, aggression) and emotion. Humans think and act on intelligent and rational processes beyond the immediate situation. "This is what separates Humans from Animals" and "That's what makes us more than mere animals" is what they tell me.
I tend to disagree. But clearly they have an emotive pride and need to defend themselves to hold that view and will do so.... while I think I have better things to do with my time than argue with such a meme.
scarfie | 26 Feb 15, 11:20am New
Dead right we are experiencing a demographic cliff - baby boomers - but it is unfair to blame them for the problems caused by inept/greedy Politicians/Bankers/Beaurecrats/Eurocrats. The demographic situation has beeb visible for decades and the failure to plan for a static or reducing population exposes the "Establishments" incompetence or deliberate deceit(hidden agenda) and now would be a good time to change the control mechanism perhaps by referenda so the population has a real say in how society/environment is managed. If we have reached or passed the point were consumption of natural resources is unsustainable we either reduce / use those resources more efficiently or plan for a reduced population, failure will ultimately result in war or pestilence/disease which will impose a solution.
i agree that is the source of current trends.
It is made worse by the need to chase profit to survive. the hoarders and cunning hope to thrive rather than use foresight and intelligence to mitigate the problem.
like the possible global changee, many see this as an opportunity to invest in agricultural dams and profit from the change rather than actually fix the problem.
And the BBs are not adults? ie take responsibility to understand the world around them? I mean its simple math, expotential growth does not work on a finite planet. So the BBs blaming someone else for their own excesses is more than a little rich.
Otherwise I go for 'deliberate deceit" in the form of short termism as the only way the pollies could see to keep the voters happy and hence re-elect them.
"incompetance" also plays a significant part but really again the BBs as voters bear responsibility to as hard Qs and vote in competant people.
We have indeed passed such use of resources so with 7billion ppl and a planet that can only feed 1.5~2billion once oil is gone (by 2050) Im all ears how this works out over the next few decades as we decline.
"failure will ultimately result in war or pestilence/disease which will impose a solution." This seems increasingly likely. You only have to look at say Egypt to see these are countries that are on the edge on significant unrest if ppl cant eat. Then there is Pakistan and they have nukes. India has an electrical system that has no redundancy if the recent outage is an indication. Lets say these 2 go at it again, even if they dont nuke each other just how their infrastructure continues to work is interesting. Then what do they do if they cant get power bak up? oh boy.
If you have
10% unemployed, 90% employed - available workforce = 100%
youth unemployment 50% - youth employed 50%
The 50% unemployed youth are counted in the 10% total unemployed
Therefore 10% of the available workforce contains 50% of the youth workforce
Therefore 50% of the youth workforce = less than 10% of the total workforce.
So total youth workforce = less than 20% of the total workforce.
It is possible that 100% of the 10% without jobs could be the youth.
in japan it is a case of "why would I get married??" and "why would I want to have children??"
both just get you penalised and effectively peopke are wards of the State, and like many independent animals they see no purpose to breeding in cativity (for their "masters'" enjoyment or to support a system which makes them a hamster in a wheel
I thought I had that, but it turns out she was spending everything behind my back, not covering it. Remember what you said about not getting ahead by 25? Well took 4 years to pay off that debt she sunk us in (and couldn't finish my part time degree).
Last partner I would sit down and try to "think things through" with and she said "I can't follow numbers and really don't like doing this. I have work to do, and went back to managing her unpaid volunteer paperwork". Oh yes, I did get bitched at for making wrong decisions and "not consulting" or "making arbitrary decisions"
"treated better"?
Well, at risk of being sexist....
There is a group of people in the human race that like to gossip and pass on stories with a high degree of "romantic fantasy and msytery".
They then get surprised when life doesn't actually turn out like the gossip and of course, rather than accept that facts and data didn't support their original claim they blame someone else.
In the case of being "treeated better". Japanese culture is extremely heavy on peer pressure and conforming to public expectations. Tradition is not just something honoured but is frequently a straitjacket that gives them the Nippon strength of character and pride, but serves as a double edge sword that it's hard to improve anything - even when the change is obvious.
So Japanese women are supposed to appear subservient. They're supposed to look after house. They're supposed to make sure the children are perfect and compliant. Yet there is little support for how this is done - and money is NOT something to be talked about.
The best way around this is go and be Japanese in a place that doesn't understand Japanese traditions ! So a woman that isn't fully satisfied by husband and housework isn't an anomaly. A woman who takes a job to support family or personal spending isn't undercutting her husband or the family (ideally the wife is supposed to magically create a loan and repay it - all without letting anyone know or discussing finance). One can take a business or asset loan without it being a huge disgrace. Actually going out in public, paying attention to politics, having an opinion can all be done without her husbands' permission nor affects how her children are perceived in school.
While several Japanese men would happily let their wives have more freedom, they are even more constricted by custom - the first sign of independence instantly makes him look inferior, effeminate and untrustworthy...someone who will be immediately passed over for any job of responsible of overseeing others or accompanying paychecks. As for him to admit his finances are poor and have to go to a money lender marks him as a complete pariah and incapable of handling his wife and domestic affairs (she is supposed to do those things) and that he himself is inadequate in his job and personal discipline - a company may even find ways to distance themselves from such a leper.
Fortunately such things are not discussed in polite or public society...unfortunately that means they're seldom resolved or improved. The individual (and their whole family and associates) are just avoided in order not to become connected to such impropriety, if it is not seen or experienced then it can be ignored ... along with the individual and their family.
By coming to the West, such issues can be avoided. But it is better Japanese manners to say something nice and slightly untrue (but possible) eg that they will be "treated better" in the West.
"Somehow the transmission mechanism between the financial industry and the real economy has broken down because seven years after the 2008 Global Financial Crisis, deflation and multiple-century low interest rates are present in much of the world."
and they are often still making record profits as well, what should that be telling us?
A very good article, thanks
LOL as this is how I see things generally or I am coming to see. Some interesting looking links I'll read when I have finished up this evening.
QE as oposed to money printing will I think (or I am coming round to think) will be proven to be a worse of the 2 "evils'
For me all QE has indeed done is allowed the middlemen (banks) and the parasites (hedge funds, Goldman sucks etc) to screw the real world ie you and me more effectively.
With printing it gets out to the real ppl who than spend and thus stimuate the economy, keep ppl in jobs maybe even create jobs. QE in the hands of the bankers / hedge funds however I think it destroys demand as they extract rentier incomes off us and thus we cant spend, which destroys jobs for us.
On top of that if we (National) had simply given every adult say $10k in a one off tax rebate that I suspect would have done us far better than say tax cuts to the better off on 2008/9.
Thanks Steven.
Have a good think about the big increase in UK house building in the 1930s. That wasn't Houston stand alone housing in automobile dependent suburbs. You probably know better than me, but I believe it was by and large, good quality row housing based around tube and train accessible suburbs and townships.
Regarding finance -I found the book -Lords of Finance by Liaquat Ahamed a biography of the Reserve Bank Governors and John Maynard Keynes in the interwar period very helpful.
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