Saturday, February 21, 2009

Save! Save! Oh crap! Spend! Spend!

TOKYO — As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect.

The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.


Japan’s aging population is not helping consumption. Businesses had hoped that baby boomers — the generation that reaped the benefits of Japan’s postwar breakneck economic growth — would splurge their lifetime savings upon retirement, which began en masse in 2007. But that has not happened at the scale that companies had hoped.

Economists blame this slow spending on widespread distrust of Japan’s pension system, which is buckling under the weight of one of the world’s most rapidly aging societies. That could serve as a warning for the United States, where workers’ 401(k)’s have been ravaged by declining stocks, pensions are disappearing, and the long-term solvency of the Social Security system is in question.


My 401K has been hammered... but I can't look at my retirement investments in the short term. Right now they are in the tank, but I'm not going to be touching that money for at least another 30 years. In that time, the U.S. will go through multiple booms and recessions before I retire. I feel for all the people who are looking to retire in the near future, however this is a huge warning/reminder for people to slowly shift their investments out of the stock market and into more secure funds the closer to retirement age you go. People that ignored this old advice (or just didn't pay attention their investment) ended up gambling with their retirement funds or assumed that the bubble/boom time wasn't ending anytime soon.

This sucks right now, but at least I can give thanks that I have a stable job and it's not the end of the U.S.

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