[1experience]

Can anyone counter my impression that we are witnessing in the Western world the exact same course of events that happened in Japan in the 1990s? (low growth, high debt, ageing population, low interest rates, rising of average P/E ratios).

Am I wrong to expect that corporate valuations in Europe and the U.S. will not appreciate in the coming decades as they have in past decades?

Edit: Yes, the U.S. and Europe are indeed in different economic positions, the U.S. can still avoid the spiral if it continues to attract skilled immigration and remains a low bureaucracy, easy-to do business environment.

[websites222]

Europe yes. US, no. The US is in an amazing position in terms of demography and growth. Aging population, but not immigrant averse like Japan and not an island. The US borders a rising economy with perfect demographics for growth (Mexico). The US is the least involved country in global trade. The US is increasingly disinterested in being the world police, so that capability can be deployed to protect economic interests abroad.

We’re headed for global instability, but don’t expect the US to have a fate similar to Europe.

[GordonS]

> not immigrant averse like Japan and not an island

As the past 4 years have demonstrated, there is a very large segment of the US population is very much against immigration, and would happily turn the country into an "island" by building walls around the land borders.

[_-david-_]

That is not really the case. The last poll I saw said 78% of Americans are fine with some immigration.

The exact amount of immigrants and the requirements to come here legally is less uniform in acceptance.

The biggest issue is between legal and illegal immigration.

[tzs]

That 78% breaks down to something like 90% of Democrats, 80% of Independents, and 60% of Republicans.

Among the Republicans, the 40% who are anti-immigration tend to feel very strongly about it, and are likely to consider it a major issue. The 60% of Republicans who are OK with immigration are less likely to consider it a major issue.

This makes it hard nowadays to get Republican support in the House for pro-immigration policies, because a pro-immigration Republican member of the House will attract anti-immigration primary challengers who will get the vote of the 40% who are anti-immigration. With that big bloc in hand its hard for the challenger to lose.

You can see a similar thing with abortion. About 60% of Republicans favor keeping Roe v. Wade, about 30% want to overturn it, and the rest are unsure [1]. But how many Republican members of Congress will come out or vote in favor of keeping Roe v. Wade? Pretty close to zero because doing so is political suicide in their next election.

[1] https://www.npr.org/2019/06/07/730183531/poll-majority-want-...

[andonisus]

The US still allows, and has been allowing over the past four years, people to immigrate.

[frockington1]

Compared to other nations, the US has the least restrictive immigration laws. The US also benefits by bordering Canada with some of the most restrictive immigration laws. If you want to go where there is growth, there's no other option

[ardy42]

> Compared to other nations, the US has the least restrictive immigration laws. The US also benefits by bordering Canada with some of the most restrictive immigration laws. If you want to go where there is growth, there's no other option

I thought Canada was far easier. I knew a software engineer who, about 15 years ago, got the Canadian equivalent of a green card as a "backup" without ever having actually lived there, in case she had problems with her US immigration. It sounded like a box ticking exercise, though this person had two masters degrees (IIRC, the second was to keep her status since she graduated from the first into a recession).

[smooth_remmy]

Canada is easier for legal immigrants, and much harder for illegal immigrants.

If you try to illegally immigrate into Canada, they will deport you

[unicornfinder]

Surely you jest? The UK, Canada, Australia are all far easier to immigrate into as a skilled worker.

[ChuckNorris89]

You're right. Though, the tough US immigration laws ensure they only allow in the crem of the crop or the most dedicated illegal immigrants.

[websites222]

The last four years can’t really be compared to the last 2000 of Japan’s. Immigration is already ingrained in American culture. The aging boomers will die and be replaced by the most ethnically diverse generation in American history.

[tjs8rj]

It's disingenuous to cast immigration concerns like an "aging boomer thing". The vast majority of Americans are fine with vetted, legal immigration. According to Pew, nearly 80% worry about illegal immigration "At least a little" to "A great deal". Furthermore there are real concerns, costs, and benefits to be weighed with immigration of all kind (legal and not), and dismissing them is just naive.

To list a few different people find concerning: depressing wages of domestic population, rapid cultural change of domestic population, brain drain from foreign population, strain on tax / social systems, ineffective vetting allowing cross-border contraband and criminal activity, and so on.

All of these are valid and deserve scrutiny and investigation. Obviously there are many beneficial aspects to immigration, and nearly all examples of very successful civilizations in history were at a crossroads of many cultures. Just wanted to make it clear that the immigration debate won't "die with boomers", and it shouldn't, because it is an important discussion to have.

[WalterSear]

Large in number, yes, but not in proportion to the total population.

Moreover, mostly in the places where productivity is not happening. Their growing irrelevance and sociocultural aversion to change are primary reasons for their vocality.

[imtringued]

There was an article about this on HN. The perception of polarization is greater than reality. The overlap between republicans and democrats is pretty high. Most of them are only moderately against or in favor of migration.

[aaomidi]

Good thing is that segment of population is:

1. Dying out.

2. Not in places immigrants want to immigrate to.

[ardy42]

> 2. Not in places immigrants want to immigrate to.

There's reason to doubt that. A lot of Trump's support was rural, and a lot of immigrants are farm laborers.

[WalterSear]

Farm laborers perform an essential role, but it isn't one that is driving US economy.

[mcv]

Why Europe yes but US no? Europe is also not immigrant-averse and not an island. It doesn't border on Mexico, but it does border on many other countries.

I don't see why Europe would suffer a much different fate from the US.

I think the main thing holding the EU back is their love for austerity. They could do a lot more to invest in their economy.

[websites222]

Europe as a going United concern is headed towards a breakup. Germany’s demographics (and patience) will not not hold to support countries like Greece and Italy, which funded pensions instead of spending their bailouts responsibly. France will flourish, like it always does, because it’s more or less self sufficient and is strategically located and internally configured, but other countries like Spain will flounder due to internal conflicts. All of these will lead to a mixed to poor economic condition of slow growth and low to negative interest rates.

[me_me_me]

Maybe if you are writing a political thriller.

EU as a concept is still highly supported amongst adults and young adults. And if anything Brexit strengthened that, since UK is a now a clown that everyone laughs at with all the issues they are going through.

A lot of young people migrate between EU countries and just that is the biggest visible positive that all working adults recognise. Its something people would not want to lose willy-nilly. Something realllly serious would have to happen for EU to fail catastrophically.

[websites222]

Nationalism is on the rise. We are 7 decades removed from the horrors of conflict on the continent. Everyone who remembers that is dying.

The EU is a globalization project in an era where globalization is on the decline. It was held together by US warships and will fall apart as they recede, a vacuum filled by local, competing powers. Europe will not be immune to it, since it is after all composed of many cultures and many economies with competing aims.

It’s not a matter of what people want, it’s a matter of economic realities that will impugn any high-minded desire for unity and collaboration.

[thu2111]

Die Zeit: "In the dispute over the delivery delay of the AstraZeneca vaccine, the EU Commission is currently making the best advertisement for Brexit: It is acting slowly, bureaucratically, and protectionist. And if something goes wrong, it’s everyone else’s fault. This is how many Britons see the EU, and so the prejudices were confirmed at the beginning of the week"

https://www.zeit.de/politik/ausland/2021-01/astrazeneca-eu-k...

MSN Money: "Bild tore apart Von Der Leyen's explanation of the vaccine delays and threat to stop supplies heading to the UK line by line, accusing her of placing 'junk' orders for vaccines three months behind Britain. 'She says: "We know that there is no time to lose in a pandemic," but what she means is: "We may have wasted time. But we will NEVER admit that",' the newspaper wrote. Meanwhile 'Brexit Brits continue to receive full supplies,' the paper added.

https://www.msn.com/en-gb/money/other/german-media-savages-e...

New York Times: "E.U. Makes a Sudden and Embarrassing U-Turn on Vaccines"

https://www.nytimes.com/2021/01/30/world/europe/covid-vaccin...

The Telegraph: De Standaard, a Belgian newspaper, said the success of the Prime Minister’s move was a source of great frustration to the French, in particular, who are lagging far behind in their vaccine programme. It suggested that Brexiteers would take heart from that because Paris had regularly taken a hardline stance in the Brexit negotiations. The Flemish newspaper said that Mr Johnson liked to take risks and in this case, as opposed to in Brexit, the gambit had worked.

An El Mundo editorial accused the EU of a "failure" on vaccine procurement, citing a "lack of coordination between member states to articulate a homogeneous process" which is "ruining the prospect of achieving herd immunity after the summer"

https://www.telegraph.co.uk/news/2021/01/28/best-advertiseme...

Daniel Stelter, Manager Magazin: It is dawning on the German and European population that the political class has failed across the board in meeting the enormous economic and social challenges of the Corona crisis. It marks the accelerating decline of the EU. Everybody in the economic sphere now knows that whenever there is a problem at a production site in the EU, there is a risk of being hit with an export ban: vaccines today, biotech tomorrow, and the day after tomorrow what? This destruction of trust in the EU as a place of business (Standort EU) is all of a piece with its tendency towards over-regulation and planned-economy control. The gap between wish and reality in the EU is greater than ever. By failing to procure vaccines, the EU has validated Brexit and given all EU citizens an objective reason for euroscepticism.

https://www.manager-magazin.de/unternehmen/autoindustrie/exp...

But yeah sure, it's a clown and everyone is laughing ... all the stuff I just quoted is fiction only happening in a political thriller.

[me_me_me]

What are you even trying to say though?

I command you for putting effort to writing a post.

But you probably have no idea of british politics beyond headlines for newspapers. Uk dealing with covid was a circus on fire.

Here [0] UK has highest death per capita behind Belgium (super high pop density) and Slovenia (they had also excelent ideas on dealing with covid - have slovenian friend).

Johnsons gov did multiple 180 when dealing with covid, recently promised schools will stay absolutely open, only to closed them after 1 day that they were open.

[0] https://www.statista.com/statistics/1111779/coronavirus-deat...

I am not going to change you mind anyhow so have a great day living in your political thriller.

[mcv]

Still, the US seems to have a lot more internal conflicts. People are openly discussing civil war there. I think the EU does a better job of learning from its past, and support for the EU is pretty high.

Of course there will always be problems in the EU, but I don't see it breaking apart any time soon.

[rasz]

Support Greece? By forcing it to pay back bad German bank loans that should be defaulted?

[godtoldmetodoit]

You might want to mention some sources in case people are interested in reading more on this theory.

Namely: Peter Zeihan. I'm a fan of the guy - his logic and rough predictions certainly seem to be bearing fruit over the last decade. If he's right about the coming decade we are in for a bit of a bumpy ride.

[websites222]

Agreed! I'm plagiarizing wholesale from Peter Zeihan, I'm not a geopolitical expert. I recently read Disunited Nations. His YouTube videos and podcasts are very interesting.

Re: your comment about being in for a bumpy ride: I think his logic is solid in that the bumpy ride is only in relation to the unprecedented post-WWII/post-cold-war era. We know from history that the norm in the world is instability.

[pepperonipizza]

Pretty much all the countries in America have a fertility rate around 2 more or less. Even Mexico is approximately at 2.1 They will start to lose population in a few decades.

https://www.cepal.org/en/pressreleases/latin-america-and-car...

[polskibus]

More importantly, has Japan ever recovered from such state?

[jonpurdy]

I'm just a casual observer, but Japan had a "lost decade" post-bubble where average inflation and growth rates averaged 0%, but this has extended to a "lost two decades" now.

(Side note: Japan's cost of living has also not increased with the rest of the world, which is why it's much more affordable to travel there these days than it was before.)

One thing I don't understand (due to my own lack of knowledge) is related to real estate. Japan has been excellent by supplying enough medium and high density housing to keep housing prices relatively low and ensure individuals and families have access to that basic need. Presumably partially because of this (also because people generally don't want used houses), housing there isn't really considered an investment because the house is amortized over a 20-40 year period and demolished at the end of it. For those who know, how does this affect inflation and growth rates? (And feel free to correct anything I'm incorrect about.)

[moltar]

Japan was somewhat forced into the predicament. See the works of Richard Werner.

[spacedcowboy]

Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ...

So who knows ?

[ovi256]

That would necessitate higher interest rates to cool down a heated economy, not low / negative rates.

[JKCalhoun]

That's more short-term with regard to OP's question.

[onion2k]

At the current rate of vaccinations, 1.5m a week, with people needing 2 shots (750,000 people a week), it'll take approximately a year to get to 90% of the adult population vaccinated with 2 shots: 50m adults * 0.9 / 750,000 = 60 weeks (I've knocked off 8 weeks because vaccinations have already started). The idea that people will be back out spending again in the summer is ... ambitious.

[andrepd]

You do not need 90% of the population vaccinated in order to live life again. As soon as you've protected the high-risk demographic and all that's left are the under 50s or under 40s for whom the CFR is 0.3% or 0.1%, you can pretty much go back to normal.

The zero-risk mentality is silly.

[mnw21cam]

I disagree.

If the R0 number is somewhere around 3 (and I think this is perhaps a rather conservative estimate), then you should expect the R number to approach near R0 again if we lift all the lockdown restrictions. If R is around 3 with nobody vaccinated, then the virus will grow if fewer than 2 in 3 people have antibodies (something like 90%+ of those who are vaccinated and an unknown proportion of those who have had the disease). If we declare the high risk demographic safe because they have all been vaccinated, and therefore we can go back to licking each others' eyeballs, then you would expect the entire population to become infected in a matter of a few months.

0.3% of the entire population is more people than have died in the UK so far from the virus.

But more importantly, a much greater proportion of people will require medical help, and then survive, when infected. If you allow the virus to run rampant, then you will end up with the health service overwhelmed with people who need help. Those poor health service workers need a break. If we overwhelmed them, then we might discover just what proportion of infected people die without medical intervention.

To stop the virus growing in the population, we need at least 2 in 3 people to have antibodies. In order for that to happen, we need to have about 75% of people vaccinated, in order to account for the small proportion of people who won't develop effective antibodies after vaccination. We can only lift all the restrictions once that has happened. That is the point at which the herd immunity prevents the virus from growing, and protects the unvaccinated.

[onion2k]

90% vaccinated isn't zero risk. People will still get the virus. 90% is the upper bound on the level necessary to stop the viral spread increasing again (70% to 90% according to literally every source I've ever seen). You can choose to accept the lower bound instead if you want to, but using the upper bound instead just makes me a bit more cautious rather than 'silly'.

[seanbarry]

What % of the population has already been infected?

[spacedcowboy]

Worth noting that the current vaccination rate is now twice that, at roughly 3M/week.

https://www.travellingtabby.com/uk-coronavirus-tracker/

[mhh__]

For the last few days the rate is much higher than that.

We did 1% of the entire population in a day a few days ago