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.