It’s come to this: Japanese selling gold and buying adult diapers

The boom years of the 80s is officially over for Japan.  The generation which brought Japan to the height of global economic supremacy – a condition which lasted less than a decade – is now old, tired, and retired.  They have left a legacy of debt, social and economic instability, and guaranteed a bleak future for their children and grandchildren.  They traded the future of Japan for a brief glimpse from the top of the mountain.  Now they are selling a symbol of their opulence….

In Japan, people who are old enough to have lived it as adults still reminisce about the bubble that blew up in 1989 when the Nikkei almost hit 40,000 (now at 9,045) and when the already sky-high prices of real estate could only go up further. The slide from the tippy top to reality today has been brutal, and a lot of people lost their shirts.

A home changed from being an “investment” to being an “expense.” Stocks became toys for traders. And government bonds, because they kept their value though their coupons were practically imperceptible, became the place to go, and by golly, there suddenly were a lot of them, a veritable tsunami of JGBs that is still building momentum and will reach by the end of this fiscal year one quadrillion yen ($14 trillion), 240% of GDP. But there has been one investment, especially since 1999, that has worked out phenomenally well for the otherwise hapless Japanese investor: Gold.

Alas, they’re dumping it.

….in order to buy a symbol of a dying generation.

Unicharm Corp. (8113)’s sales of adult diapers in Japan exceeded those for babies for the first time last year. At Daiei Inc. (8263) supermarkets, customers can feel Japan aging — literally: It has made shopping carts lighter.

Companies are rushing to grab a bigger chunk of the estimated 109 trillion yen ($1.4 trillion) that consumers over 60 spent in the year ended March 31 in Japan. The number of Japanese over 65 hit a record 23.3 percent of the population in October.

“We perceive this change as a golden opportunity for growth,” Shohei Murai, executive vice president of supermarket operator Aeon Co. (8267), told reporters in March. “In the ‘80s and ’90s, Aeon set families that were the massive majority in terms of population as its main target. Now the elderly are going to be the engine of consumption.

Aeon, Asia’s largest retailer, is putting medical clinics in some of its locations.

Nothing lasts forever.  The generation which rebuilt Japan believed that they had found the secret to unlimited success and eternal wealth.  But they were wrong.  Sadly, they refused to admit that they were wrong and decided that they could maintain their lifestyle by borrowing, subsidizing, and otherwise propping up and covering up their mistakes.

In the same manner, the future generations of Japanese are bound to believe that the debt burden their parents placed on them will be likewise eternal.  Perhaps it will seem that way to them as taxes are raised, social benefits are cut and life is not the same as that enjoyed by the aging generation. Fortunately, however, the upcoming and future generations of Japanese can make a better future for themselves.  But they can’t do it by allowing the political and economic vestiges of the past to remain in control.

It is time for the young Japanese to step out of the shadows of their parents and assert control over their own lives and the future of their declining nation.  The first step is to recognize the current situation and the problems facing them in the future.  The second step is to forgive their parents.  The third step is to retire the current crop of politicians and bureaucrats who seem not to be very capable at their jobs – to put it kindly.

The alternative is to do nothing and hope for a miracle or settle for whatever the future holds.

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