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Is Japan Too Old To Grow?

  • Written by Syndicated Publisher No Comments Comments
    April 8, 2013

    The Japanese Social Security system has a report out on the aging problem in Japan (Forbes link).  That Japan has a rapidly aging population is an old story, but the new numbers are worth considering.


    Japanese Work Force

    2010 = 82m

    2025 = 71m (-13%)

    2040 – 58m (-30%)


    Japanese Total Population

    2010 = 127m

    2050 = 80m (-37%)


    Japanese Aged Population

    2010 – 11% of population is 75 or older

    2025 – 22%+ will be >75 (Double)


    I defy any economist to show me a road map for Japan that does not lead to crisis based on these numbers. I don’t care what Abe says, or what the new head of the Central Bank, Kuroda, does. It will not matter.  As a country, Japan is a long-term short.

    Japan’s pay-as-you-go Social Security system will rob future worker’s paychecks. The cost of medical care for the +75 group is 5Xs that of younger citizens. Budget deficits to pay for all this will have to explode, the national debt with it.

    There have been dozens of rallies in the Nikkei the past 23 years. With each rally, the bulls came out and proclaimed that the bottom had been set. The current rally is no different. The thinking by many is that a new golden age for Japanese stocks is upon us. I find that hard to believe. I don’t care how much money Japan prints. Those printing presses can’t offset the powerful force of demographics, at least not for long.




    There are always different views on Wall Street. There are plenty of folks who love Japanese stocks, believe that printing money solves all problems and that demographics don’t really matter at all. Time will tell.













    Images: Flickr (licence attribution)

    About The Author – Bruce Krasting

    I worked on Wall Street for twenty five years. This blog is my take on the financial issues of the day. I was an FX trader during the early days of the ‘snake’ and the EMS. Derivatives on currencies were new then. I was part of that. That was with Citi. Later I worked for Drexel and got to understand a bit about balance sheet structure and corporate bonds from Mike Milken. I was involved with a Macro hedge fund later. That worked out all right, but it is not an easy road. There was one tough week and I thought, “Maybe I should do something else for a year or two.” That was fifteen years ago. I love the markets. How they weave together. For twenty five years I woke up thinking, “What am I going to do today to make some money in the market”. I don’t do that any longer. But I miss it.