Can Japan Survive 2020?

It’s now likely that Japan will face a social and economic collapse by the end of the year. It will take a miracle to keep it from buckling under sudden new pressures while it’s in a very weakened state.

Japan has been in a very precarious situation for a decade at least. Their birth rates are negative, their population is getting very old, and their banks have negative interest rates. That means the country is bleeding money from every hole and they don’t know how to fix it. It’s gotten so bad that they’ve finally swallowed their pride and accepted that they need to have immigration to fill their work force, despite extreme racism and an almost magical belief that they can innovate their way out of anything.

Last year the GDP of Japan shrunk 6.3% even before the new pandemic virus, as the BBC reports:

Coronavirus Fears

The Wuhan coronavirus has all the ingredients of being “the big one” that kills off millions of people this year and destroys the globalized supply chains, international travel, and trade routes. According to current studies and statistics the virus will affect Asians and old people the most, with the Japanese genome being particularly susceptible. But it will also continue to mutate and circulate around the world for years, logically. Some people are becoming re-infected by the same virus even after they recover, meaning it might not even go away on an individual level.

Even if Japan somehow contains the virus and minimizes its impact, the fears around the virus will force dramatic reactions in the stock market, with every rumor and headline punishing them. Remember that even under normal conditions Japan has entered a recession.

Olympics 2020

Japan is hosting the 2020 Summer Olympics, which is a giant strain on a city’s economy even in the best circumstances. Millions of people must be able to travel freely, trust the services in the area, and get back home safely or there could be lawsuits, hospitals being flooded, riots, disruptions, and a lasting scar on the country’s worldwide reputation.

This is like a 90-year-old man trying to run a sprint, and then strapping cinder blocks on his back at the last minute.

Prime Minister Shinzo Abe at the 2016 Olympics dressed as Mario

PlayStation 5

Sony is in dire trouble this year. They need to produce millions of PlayStation 5 consoles in a world state where supply chains are wrecked, China’s biggest tech region is quarantined in a hellish police state, and the virus everyone’s panicking about can survive on surfaces for days and spread between people for weeks before symptoms even begin to show. Those consoles have to be built, packaged, shipped, and warehoused without investors freaking out and “adjusting” their money elsewhere.

And that’s the big question: what will investors do? Trillions of dollars of investments slide and splash around even in normal years, as the rich seek to get richer by putting their money in smart places. Will anyone invest in Japan at a time like this? Does anyone think Sony will have a good 2020?

Downplaying everything

Today more than ever, experts and news media try to control headlines. The United Nations and World Health Organization are trying to control the narrative around the virus and its implications, but nobody is telling the truth yet. The more information comes out the more it looks like a pandemic beyond anything we’ve seen since the Spanish Flu that killed tens of millions of people in 1920, a hundred years ago. That was at a time when globalization didn’t exist and economics were as straightforward as you could get. Today? The world has been tied together in every way imaginable, with information and money reacting in real time.

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