Japan, Aging Population, Growing Debt...
There is an awesome Scribd in this Big Picture post that seems to pull together a lot of my market thoughts.
The slide show tells the story of what Japan did and the similarities of path seem amazingly close. The author, Katsenelson, claims Japan is past the point of no return because of debt. I tend to think without serious reform many developed countries will follow.
Check out slide 8, Japan has a declining population. I have said something similar a few times about an aging population "As people get older their incomes start to decline, their expenses (health care) rise, their savings rate drops. Their demand for bonds will drop as well- Japanese will become net sellers of bonds."
I have said expect demand for stocks to decline as the population ages. Here's something else, what do you expect the younger generation inheriting the wealth to do? They have had far less opportunity to accumulate wealth and have been debt slaves their whole lives. My guess, they will pay off debt and that money will be pulled from investments.
The birth rate is low because the economy is hard and young people delay starting family under those circumstance. The tend to have less children or even no children. Their fertility rate is the lowest in the world because the burden on the young people is the highest. People delay starting families and biological clocks run out while people are trying to gain financial stability.
They have hit end game on low interest rates, they can no longer lower them to keep costs down, and I suspect if interest rates were priced for risk many countries would be in trouble right now as well.
Yikes, slide 12, not only is the population aging, it is declining, that increases the debt burden per person. I can not see with the economic burden and lack of opportunity how the birth rate stays up in North America. Canada was bring almost out of control debt under control in my early adult years and look what it did to our birth rate.