Posted on 08/13/2013 1:47:48 AM PDT by TexGrill
Few words strike greater fear in the hearts of economists and politicians than “Japanization.” That specter of chronic malaise, deflation and bad debt has driven central bankers from Ben S. Bernanke in the United States to Mario Draghi in Europe to flood markets with liquidity in an effort to avert their own lost decades.
It should worry China, then, that experts on this dreaded scenario are turning their attention to Beijing. Take Brian Reading, whose quest to understand what the world can learn from Tokyo’s mess dates back to his prescient 1992 book “Japan: The Coming Collapse.” He recently wrote a 40-page report with Lombard Street Research Ltd. colleague Diana Choyleva titled “China’s Chance to Avoid Japan’s Mistakes.”
Over at JPMorgan Chase. in Hong Kong, investor inquiries on the similarities between China and Japan drove Grace Ng to revisit the topic. She warns that China today and Japan in the 1980s share an uncannily similar buildup in broad measures of credit to almost double their economies’ size.
So, just how susceptible is China to Japanization? Very, actually, and only bold and creative action on the part of President Xi Jinping and Premier Li Keqiang can avoid it. Think of their 10-year term that began in March as China’s make-or- break period to dodge a major debt crisis.
China is not impossibly indebted, considering it has $3.5 trillion in currency reserves. JPMorgan reckons its debt to gross domestic product ratio rose to 187 percent in 2012 from 105 percent in 2000, compared with Japan’s increase to 176 percent in 1990 from 127 percent in 1980. Japan’s has exploded since then and could approach 250 percent of GDP next year. That would mark a jump of 10 percent from 2012 alone in a fast-aging nation that’s losing global competitiveness.
(Excerpt) Read more at koreajoongangdaily.joins.com ...
Ol’ Helicopter Ben has inflated our economy with so many shrinking dollars that the stock market now shows a phony 20% growth in the past year, while U.S. businesses only show 4% profits. When the stock bubble bursts, the pain will be severe for those who stayed in to try to make the last dollar.
not buying it.
not with the USA producing another 1 million barrels@day of oil annually — and the government deficits shinking rapidly.
This stuff shifts capital flows all over the place.
aka China gets the Vapors
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