Posted on 11/01/2009 2:58:57 PM PST by blam
It Is Japan We Should Be Worrying About, Not America
Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return.
By Ambrose Evans-Pritchard
Published: 5:33PM GMT 01 Nov 2009
The rocketing cost of insuring against the bankruptcy of the Japanese state is telling us that the model has smashed into the buffers. Credit default swaps (CDS) on five-year Japanese debt have risen from 35 to 63 basis points since early September. Japan has suddenly decoupled from Germany (21), France (22), the US (22), and even Britain (47).
Regime-change in Tokyo and the arrival of Yukio Hatoyama's neophyte Democrats – raising $550bn (£333bn) to help fund their blitz on welfare and the "new social policy" – have concentrated the minds of investors at long last. "Markets are worried that Japan is going to hit a brick wall: the sums are gargantuan," said Albert Edwards, a Japan-veteran at Société Générale.
Simon Johnson, former chief economist of the International Monetary Fund (IMF), told the US Congress last week that the debt path was out of control and raised "a real risk that Japan could end up in a major default".
[snip]
(Excerpt) Read more at telegraph.co.uk ...
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Obama Says A Baby Is A Punishment
Obama: “If they make a mistake, I don’t want them punished with a baby.”
Jaqpan is the second largest foreign holder of our debt.
""The debt situation is irrecoverable," said Carl Weinberg from High Frequency Economics. "I don't see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this."
Is this in resonse to the phrase about the “baby strike?”
It is not clear why we should worry too much about this. About 95% of Japanese government debt is held by Japanese savers. They will have to work it out among themselves.
It troubles me too. I know from first hand experience that the people who make the country work, work very hard. They deserve better.
I doubt we'll have any kind of a reasonable world until John Maynard Keynes is in utter disgrace for the villain he is.
Japan owns a lot of US debt. If they, or especially China dumps their US dollar investments, we are in Big(ger) Trouble (than we're in now).
If their birthrates were what they were 80 years ago, then there would be no problem —they certainly won’t be importing millions of Phillipinos, of that I can assure you.
All society that follow Keynes for decades but do not have high birthrates will go the way of Sweden —implosion or suicide.
Well, let’s look at the real world instead of paper.
Stocks and bonds are deferred consumption. People save and invest money on the assumption that they will eventually be able to buy real goods and services in the future.
Japan’s problem is that the amount of outstanding debt so large that they cannot tax enough real goods and services out of their economy to satisfy what is owed to the bond-holders, if they eventually decide that they want to trade in their holdings for physical goods and services, as is likely enough as they approach old age.
Now Japan does have a lot of US Treasury debt. But if they just sold it, and converted the proceeds into yen, they still couldn’t supply physical goods and services to their bondholders. They would be better off to hold the bonds, or sell them for dollars, and use the money to buy goods from the US. We do have physical capacity and could use the business, to some extent. We would have to consume somewhat less, but money from overseas would be flowing into our economy.
Our problem has been that our bondholders have been willing to hold paper certificates, and paper dollars. That takes away the discipline that we need to have a proper economy, because we can overconsume just by issuing debt. Of course, if the dollar is a world reserve currency, foreign countries will just trade back and forth among themselves using dollars. But each dollar overseas in fact represents a potential demand on physical goods and services from US producers.
Sounds like the U.S. as much as Japan.
For our Great Leader, Hedonism is all...
Japan is a elderly society. There are not enough young people to pay the increasing taxes, and debt payments.
Who do you think Japan is going to stiff, their own monoculture people, or outsiders? That ten percent or so, of foreign debt, is like number two in the world.
That means a lot other debt is going to get swamped, cast in doubt. Of course AIG was the worlds most successful, largest insurance company and they knew what they were doing right?
I think most countries are so far down the lying/fantasy/delusion hole, that the stock answer is to keep digging,( maybe we will hit China ).
Workers of the world, unite! We have noting to lose but our Keynesians!
Tomorrow should be fun on Wall Street.
Why not?
Filipinos are among the world's best workers.
They have a solid work ethic and are mainly Christian.
Japan could, and is doing a lot worse by importing North Koreans.
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