economics financial

Cautionary tale from Japan

The videos and pictures from Japan are unbelievable. Buildings and cars being tossed around, who knows how many people have been killed. The recovery is just starting and it could take a while to go back up and running again.

Japan has been in the economic doldrums for a decade and a half. They have continually tried to “stimulate” their way out of the mess only to find themselves with no economic progress and mounds of debt. They have been going along, just keeping a stagnant economy for a decade, and now this happened.

How often do we make a budget and tell ourselves that “This looks fine, as long as nothing comes up…” The thing is, something always comes up. The car breaks down, you need a new bed, you have to leave the country suddenly because of an insurrection outside of the city, you get diagnosed with MS, etc. A budget that is actually good will take into account the unexpected expenses. If you are just getting by and then something comes up, you could be in trouble.

Japan hasn’t been involved with any struggles against any “existential threat” that might endanger their country. They, like many states in the US, were simply going along doing what they thought was expedient to avoid certain short term pain. They had been up to their chins in debt, is the level going to rise over their nostrils now? This natural disaster has revealed just how shaky their economic situation has been.

We can learn a lot from Japan. The US economy is doing OK, not great, and there’s a lot of rot and underhandedness just under the surface. There will also be a lot of debts coming due in the near future that we are not prepared for. We’re skating by, but it wouldn’t take much to push us under. I doubt any, even large, natural disaster would do it, but maybe a big spike in oil prices could. The way things are going over in the middle east, it isn’t out of the realm of possibilities. The Saudi military is now in Bahrain, the US administration has had to go out of its way to claim that it isn’t really an invasion…. There could be any number of other things that happen, we’re in no shape to deal with them. This is why keeping debt down is so important on both a personal and national level. Having some surplus for just in case is just good sense. Spending everything you take in and then some leaves you vulnerable to any number of problems. We’ll see how Japan deals with this added burden, and I hope we never will be in their economic shoes.

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