Posted on 06/11/2014 12:32:39 PM PDT by Lorianne
Financially speaking, Japan is fast becoming a Keynesian dystopia. Its entire economy is now hostage to a fiscal time bomb. Namely, government debt which already exceeds 240% of GDP and which is growing rapidly because even the recent traumatic increase in the sales tax from 5% to 8% does not come close to filling the fiscal gap. Moreover, even at todays absurdly low and BOJ rigged bond rate of 0.6% nearly 25% of government revenue is absorbed by interest payments.
Now comes the coup de grace. Japans savings rate has collapsed (see below) and its vaunted current account surplus is about ready to disappear. This means Japans accounts with the rest of the world will cross-over into a financial no mans land; it will be forced to steadily liquidate its overseas investments to pay its current billsan investment surplus built up over the course of 50 years. But this will also reduce foreign earnings and thereby expand Japans growing deficit on current account.
Accordingly, to finance its twin deficits it will have to attract massive amounts of foreign capital for decades to comean imperative which will require a devastating rise in interest rates, perhaps as high as 4% according to one expert :
(Excerpt) Read more at davidstockmanscontracorner.com ...
Can we just get this financial collapse thing over with already!
the best way to stay ahead of the world... export liberalism !
“That” David Stockman.
Could there be a connection between secure savings such as bonds paying almost nothing and people choosing not to save?
So who’s going to add Japan to their empire? Russia? China? The U.A.E?
Regards,
Bookmark
Would Japan like to “rent” some unwanted surplus refugee children?
They do have 1.1 trillion dollars in US Treasuries they can dump to soften the transition.
“Could there be a connection between secure savings such as bonds paying almost nothing and people choosing not to save? “
I wonder what they’re calling savings? I moved everything into the stock market. But now I’m transitioning it into rental property. Neither would be called “savings.” Everybody I know has ditched their “savings” account and is doing some sort of investment. More and more are moving it into solid objects with tangible value; old cars, art, coins, property, etc.
Now comes the coup de grace. Japans savings rate has collapsed (see below) and its vaunted current account surplus is about ready to disappear. This means Japans accounts with the rest of the world will cross-over into a financial no mans land; it will be forced to steadily liquidate its overseas investments to pay its current billsan investment surplus built up over the course of 50 years. But this will also reduce foreign earnings and thereby expand Japans growing deficit on current account.
Accordingly, to finance its twin deficits it will have to attract massive amounts of foreign capital for decades to comean imperative which will require a devastating rise in interest rates, perhaps as high as 4% according to one expert...
PFL
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