Japan Pension and who has agreements where you can transfer credits for the basic state pension.

According to http://www.nenkin.go.jp/n/www/english/detail.jsp?id=34  the list of countries with such agreements with Japan are Germany, United Kingdom, Korea, United States, Belgium, France, Canada, Australia, Netherlands, Czech Republic, Spain, Ireland, Brazil, Switzerland.

The Japanese National Pension System, which is the Japanese equivalent of Social Security. In order to get money from that you need to have paid for at least 25 years (might get decreased to 20 for foreigners, but not yet). Also, the amount you get is whopping 65,541 yen per month for 40 years of contributions. Less for under 40 years …
References to numbers are from here:
http://www.nenkin.go.jp/n/www/share/pdf/existing/english/pdf/1.pdf

(1) Old-age Basic Pension

If you have paid the National Pension contributions for at least 25 years and satisfy the conditions, the following amount is paid when you become 65 years old. *1

★Benefit amount = Y786,500 (annual amount in Fiscal Year 2012 for those who have paid contributions for 40 years)  that is only 65,542 per month! 

When you go for the lump-sum payment, you are giving up any benefits, including credit under the agreement. Unless they make a mistake, they will simply delete you from their system after you refund request is processed.  This is based on the first bullet under “Important Notes” on page 5 of:

http://www.nenkin.go.jp/n/open_imgs/service/0000005247.pdf

So depending on the system you are ending up in the credit may be more than the money you get back but that is assuming the system you end up in survives.

From the Japan Pension service website:

http://www.nenkin.go.jp/n/www/english/detail.jsp?id=39

An article from the US Social Security Administration:
http://www.ssa.gov/policy/docs/ssb/v67n3/v67n3p89.html

 

Everyone needs a private personal savings plan. 

On January 31, 1940, the very first Social Security check ever delivered went to Ms. Ida May Fuller, a former legal secretary who had recently retired.

 

Ms. Fuller had spent just three years paying into the system, contributing a total of $24.75 to Social Security. Yet her first check was for nearly that entire amount. Quite a return on investment.

She went on to live past 100, collecting a total of $22,888.92, over 900 times the amount she contributed to the program. Her story is quite the metaphor.

 

If you’re not familiar, Social Security is comprised of two primary trust funds: Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI).

Essentially, all of the taxes paid in to Social Security end up in one of these two trust funds.

The trust funds then ‘manage’ the money to generate a rate of return, and then pay out distributions to program recipients.

Now, the funds are overseen by a Board of Trustees which is obliged to submit an annual report on the fiscal condition of the program. It ain’t pretty.

The Disability Insurance (DI) fund is particularly ugly. In fact, the trustees themselves wrote in the 2015 annual report that

“[T]he DI Trust Fund fails the Trustee’s short-range test of financial adequacy. . .”

 

and,

 

“The DI Trust Fund reserves are expected to deplete in the fourth quarter of 2016…”

In other words, one of the two Social Security trust funds is just months away from insolvency.

When people think about Social Security, they think that all the problems are decades away.

Wrong. This is next year.

The other trust fund, OAS, is projected to “become depleted and unable to pay scheduled benefits in full on a timely basis in 2034.”

Which means that if you’re 47 or younger, you can kiss Social Security goodbye.

Bear in mind, these aren’t my calculations. Nor are they any wild assertions. They’re direct quotes from the trustees themselves.

And, just who are these trustees? The Secretary of the Treasury of the United States of America. The Labor Secretary. The Secretary of Health and Human Services.

Some of the most senior officials in the US government sign their name to an official report stating that these funds are nearly insolvency– one of them even NEXT YEAR.

Not to worry, though. Congress is on the case.

Late last week, several dozen members of Congress introduced the “One Social Security Act”, HR 3150, to solve this problem.

And let me tell you, their solution is bold. Fearless. And brilliant.

HR 3150 attacks the looming insolvency of Disability Insurance by eliminating the fund altogether.

So instead of having two separate funds for two distinct purposes of Social Security, the legislation aims to combine them into one unified fund.

That way, with just one fund, there won’t be any separate reporting about DI’s insolvency.

It’s genius! They make the problem go away by eliminating the requirement to report it.

There’s just one small issue. Legally, they have a word for this. It’s called fraud.

You and I would go to prison if we commingled funds like this. But in the hallowed halls of Congress, this is what passes as a solution.

This is so typical– solving problems by pretending that they don’t exist and destroying any element of transparency and accountability.

This pretty much tells you everything you need to know about government.

Look, it’s a hard reality to swallow. But the government’s own data show that these programs are not going to be there for you.

And the story smacking us in the face right now demonstrates precisely how politicians intend on ‘solving’ the problems.

These people aren’t the solution. They’re the problem.

And don’t think that ‘voting the bums out’ will affect anything. Elections merely change the players, not the game.

The only way forward is to invest in yourself, particularly in your business and financial education. Make plans based on the assumption that Social Security doesn’t exist.

And if, by some miracle, it’s still there by the time you retire, you won’t be worse off for having built a larger nest egg thanks to the financial acumen you developed.

 

http://www.zerohedge.com/news/2015-07-29/congress-proposes-fraudulent-new-law-fix-social-security

According to a new report from Pew Charitable Trusts. States are short $968 billion for their pension systems, an increase of $54 billion over the year before. When debts from local programs are taken into account, the total shortfall tops $1 trillion, according to the report.

http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2015/07/the-state-pensions-funding-gap-challenges-persist

 

You are in a bull market until proven otherwise. We are in a bull market and the question is when is the change coming?

This USA bull run started way back in 2009.

However, on a more current look the last attempt to decline was in Oct. 2014 when the S&P lost about 200 points over about 3 weeks. Then a slight wobble of 100 points in Dec and it has been a slow choppy rise to where we are today at all-time highs.  Will we go higher?  As you can see in the graph below the S&P is in a rising wedge which over time will resolve itself one way other the other.  There is a stronger probability that it will test the October 2014 lows (at worst) and then head back up, we will review if that comes. So, we would wait until this unfolds before entering or adding more to equities.

 

Japan….the economy is in an untenable position. Unless Japan open their borders and embrace change, both unlikely, their hopes to end 25 years of economic malaise rest with Abe-no-mics and massive money printing.  Abe’s three policy arrows have been largely rhetoric and designed to keep the status quo… strange as Abe did campaign on change and the future.  But, bearing in mind 40% of the voters are over the age of 60 why would they want any change quickly? Abe clearly has this in mind and not the future of Japan.  Difficult and costly choices need to be made by the Japanese people as the leaders will not do it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As you can see in the chart above the Nikkei has taken 25 years to reach the top of its Bollinger band. (This is one of the more popular technical analysis techniques. The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.)

The real problem in Japan is the containment of the human spirt –  Japan needs to unleash this innovation once again — an example is as Richard Katz says “brands like Sony, Panasonic and Sharp continue to dominate in Japan – where not a single new market entrant of any significance has emerged since 1946. In the US by comparison, 8 of the top 21 consumer electronics hardware firms, including Cisco, did not even exist in 1970. In Japan, incumbents keep holding on.”  We believe the bureaucracy of Japan has a huge role in stifling this wonderful country.

A current example of the human spirt alive and well in Japan is the food and restaurant scene now available. Back in 1990 the only foreign food was a limited McDonald’s menu – today Tokyo has more Michelin stars than France. Good thing food bureaucracy is relatively low.

The Japanese market continues to rise but the gains now are very correlated with the direction of the Yen and that “easy rise” in the stock market has happened.  Going forward can companies in Japan make real profits that are not directly linked to the weakening Yen?

 

As a contrast; Australia

Source http://www.tradingeconomics.com/japan/corporate-profits

So what other markets are lined up for a correction?   Seems all are at or not far from mulit-year highs and my guess is the US market will lead, as whatever it does the rest of the worlds markets will follow — some more violently than others.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The chart above shows the US$ index, which is a measure of the value of the U.S. dollar relative to majority of its most significant trading partners.

As you can see from the chart the US$ is correcting downwards but this is a normal correction based on the fact the US has been posting some poor economic numbers but the chart is indicating the US$ index may fall to around 90 then turn back up as the US growth numbers, even poor, look better than the rest of the world.

Dollar/Yen

 

 

 

 

 

 

 

 

 

 

 

Recently we have seen 122 as a high (March 2015) and we have seen 118 (April 2015) as the low. The pair have been stuck in trading range. This reminds me of Jan 2014 to August 2014 when the pair was stuck in a range of 105 to 100.  The BOJ continues to do QQE: the Bank will purchase JGBs so that their amount outstanding will increase at an annual pace of about 50 trillion yen and the BOJ will increase the monetary base at an annual pace of about 60-70 trillion yen. In Addition the Bank will purchase ETFs and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual pace of 1 trillion yen and 30 billion yen respectively. So again we believe the Yen is stair stepping itself higher .. once 125 vs 1$ goes there is little resistance until 147. One should not hold Yen, unless there is a material change in BOJ policy. (Remember a ‘rising’ Yen is a weakening Yen.)

EUR/Dollar

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The fall of the Euro over the last several years from 160 in 2008 to a low of 104 in 2015 — it is only natural to see a bounce but the question is how high can that bounce be 115 or 120?  We doubt anything more than 120 if it can get there — Greece is still a huge issue which leads to Portugal, Spain, Italy and the rest of Europe. These issue have not been resolved and judging by the progress in Greece things can likely only get worse.

GBP

 

 

 

 

 

 

 

 

 

 

 

The Election in the UK produced a small Conservative majority win – this has given the Pound wind in its sails for now. The question is can Sterling keep these gains longer term.

 

AUD

 

 

 

 

 

 

 

 

 

 

 

 

Australia can still cut interest rates. Many believe this will happen especially in the face of falling commodity prices.  However the last rate cut was highly anticipated and factored in as the AUS$ rose after the cut. Australia can take on more debt as the government has low debt levels compared to its peers.  The other wild card for the Aussie is China as any stimulus China does has a direct effect on the Aussie economy of just about 24 million people — about the same as the Shanghai municipality.