Following Japan's Failed Economic Model

By: Gordon Long | Mon, Nov 10, 2014
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Japan Economic Cartoon

With Charles Hugh Smith & Gordon T Long

26 minutes

Charles Hugh Smith and Gordon T Long discuss the failed Japanese Economic Model and what it means for those nations following the Japanese path of QE and then QQE.

It's not just about Japan as a nation failing -- but that it's critically important to understand that the model Japan followed in the postwar era is failing.

Japan reached preeminence via an Asian-specific form of Capitalism with these four characteristics:

Four Pillars

Four Failed Pillars - Lessons Learned

1. Integration of government ministries and private-sector cartels,

2. Heavy reliance on export sectors for growth and profits,

3. Domestic savers provide the capital for export expansion,

4. Defaults and write-offs of bad debt cause loss of face and are thus hidden from public view

Charles Hugh Smith spells out why all four have failed.

This model will fail in every nation that relies on it.

Japan's response to the failure of its growth model is not a solution but an additional problem:

-- Expanding fiscal deficits to enable more government spending,

-- Monetizing government debt (Bank of Japan creates money and uses it to buy government bonds)

Is Japan's economy unique in the world? Yes and No.

YES: It is an island state with a homogeneous populace that is culturally attuned to producing high quality goods, saving money and sacrificing individual interests in favor of the greater good. That is unique.

NO: But the mercantilism, state-capitalist, debt-dependent model is not unique -- it has been copied by other developing nations as the gold standard for rapid development."

Japan has marched down the road that all the other developed economies are presently marching down.

Following Japan's Failed Economic Model



Gordon Long

Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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