More on Aging population

·         With the aging population, it is easy to guess which sectors will benefit: health care delivery, drug companies, nursing homes... The housing industry will build homes for the empty nests and smaller houses.

The current rush to dividend stocks indicates more folks are looking for fixed incomes.

The GDP adjusted after inflation will not increase more than the average in the next 20 years and our national debts will not decrease in the same period.

·         Roughly speaking, Gen X represents the population born between 1960 and 1980 after the baby boomers who were born after WW2 and before Gen Y. Gen X is rich due to more two-income families and higher education.

·         Most developed countries have close to zero population growth (not including immigration) while the developing countries have the opposite excluding countries with civil wars.

The impact:

1. The wealth gap between rich and poor countries will widen.

2. More suffering for the citizens in poor countries. From my Coconut Theory, more folks are sharing coconuts from the same tree.

3. The rich countries including the USA will spend a lot on entitlements, health care, nursing homes... However, it is a temporary problem (for 20 or so years) as the baby boomers eventually will pass away. Baby boomers have the longest life expectancy of any previous generation. It is partly due to advances in health care industry, medical equipment and drug industry. However, many lives are being prolonged using modern medical technology. In this case, the quality of life has not been improved.

·         China is still number one in manufacturing based on low wages (but moving up), good infrastructure, regulations, educated work force and stable society. If not, Mexico should do better as they are just next to us with no tariffs and India has far lower wages. Just like any developed countries due to increasing wages, China is slipping and she has to move to higher-end products and expand her internal market.

·         More on Japan.

Japan will have the same lost bi-decades. Its economy and its market would rise until the first quarter of 2014, but it will be back to the bad old days for the following reasons:

1. Excessive depreciation of its currency and zero interest rate are no long-term solutions. If they give me negative interest rate (beg me to borrow), I still have to consider the currency depreciation.

2. Aging population and zero population growth. The only resource of this country is its hard-working and smart citizens.

3. Upset its best trading customer China on islet disputes. They need China more than the other way round. Chinese have removed Japan as a major tourist destination.

4. Baggage in the past.

Japan still does not admit the harm done to Asian countries in WW2 such as paying homage to war criminals, rewriting the text books on historical events, saying no Nanjing massacre, enjoying comfort women for comfort, sex tours in SE Asia...

5. It takes more than 10 years to recover from the problems from the nuclear reactors. At the mean time, its agriculture and tourism suffer.

6. Hosting the next Olympics could be the straw that breaks the camel's back.