Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Japan decays

Posted by Muthu on December 9, 2010

Going forward, I’m planning to make postings short or medium. Short is like the one today which covers only one topic and the medium would cover a longer topic or two topics. Long postings would be infrequent. Please let me know what you think.

In Japan, there is an extra charge of ¥100 (about $1.20) if you withdraw cash from an ATM during evenings or weekends. Overtime pay for ATM machines! In India, during weekends banks some times let the ATMs run out of cash! You would simply get an out of order message.

Some insightful statistics provided about Japan by Sanjeev Pandiya in Valueresearch.

‘Japan now sells more adult diapers than baby diapers.

Its total population peaked in 2004 and its working population peaked in 2009.

Its population is set to drop by 40 million people (30%) by 2050.

About 25% of its population is above 65.

Total debt – household, private and public – combined is running at a whopping 530% of GDP.

At 1.4% interest cost, 7.4% of its GDP goes towards interest payments.

Household savings, that big generator of surpluses worldwide, is down to 2% of GDP. In fact, it is expected to enter dissavings by 2014, as retirees start to pull out their savings.

28% of country’s revenue goes towards interest payment at an average interest rate of 1.4%.

If the rate doubles, the government would spend 56% of its revenue on interest.’

If that happens it may create an economic collapse the world has seen in the countries like Argentina, Zimbabwe etc.

Also we all know that Japan’s economy is continuously on decline for the last 2 decades.

The old people, who have saved for their rainy days are disillusioned with near zero interest on their savings.

Japanese people generally live longer and this means many of them may run out of savings and simply have to wither and die.

The government and the younger generation are in no position to support them.

What you can do to a country which once had a savings rate of 32% of GDP which now stands at paltry 2%?

The icing on the cake is even this 2% would disappear in next few years and Japan would enter the era of dissavings.

Japan has proved in the past it can bounce back from major calamities.

Would the greying Japan  be able to repeat a miracle?

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