Posted on 09/01/2009 1:45:15 PM PDT by bruinbirdman
Japans's tax revenues have collapsed by 27pc over the last year, leaving it unclear how the incoming Democrats can pay for their blitz on welfare spending without flooding the debt markets.
The International Monetary Fund already expects Japan's budget deficit to top 10pc of GDP this year and next. Gross public debt will reach 215pc of GDP in 2009, the highest in the world. "Japan faces a very difficult fiscal situation," said the Fund in its latest country report.
Democrat leader Yukio Hatoyama, who won a landslide victory over the weekend, has pledged that there would be no increase in debt to fund his $180bn boost for child allowances and social policy by 2013, but his advisors are already back-tracking as they examine the dire tax figures.
While Japan pulled out of recession in the second quarter, it has barely begun to make up for the 11.7pc contraction of its economy over the preceding year. Industrial production was still down 23pc in July. Exports were down 39pc to the US.
The Great Recession has tipped state finances into a deep crisis. Corporate tax revenues have turned negative as refunds exceed payments from companies facing a collapse in profits.
Japan's finance ministry has been able to count on a huge pool of domestic savings and a captive bond market to fund Keynesian spending projects over the years, but policy-makers fear that the debt market may reach saturation.
Yields on ten year bonds are currently 1.3pc. "Can these benign conditions be expected to continue in the face of even-larger increases in public debt?" said the IMF.
If yields rise to the OECD level of 3pc to 4pc they would cause Japan's debt to spiral out of control. This is no longer a remote possibility. High Frequency Economics says Mr Hatoyama has won
(Excerpt) Read more at telegraph.co.uk ...
That was my first thought ... someone was angry that appeared in “You Only Live Twice” :-).
Japan is going to launch a solar power satellite soon and I hope they can find a way to provide the world with power. I would much rather have the Japanese be the world’s supplier of power than the Saudis.
Plus if China could become dependent on China for Electrical power then it would help balance the powers in the Pacific Rim.
Isn’t Japan one of the top buyers of our Treasuries, behind China? I wonder how they can keep doing that if they are in worse fonancial shape than us?
The microwaves can be attenuated so that if they are pointed at the ground nothing happens except it fells like a hot sunny day if you are walking under the beam.
The whole western world can’t borrow at the same time to stimulate their respective economies. Where will the money come from to buy these bonds? The world is sucking savings balances dry trying to prop up an unsustainable standard of living. If the Europeans and the Americans and the Japanese are all borrowing to buy Chinese goods in an effort to maintain standard of living, then, we are in deep trouble...
Japan cheated using dollar buying so as to favor their exports. It worked well so long the US economy and strength backed the dollar. However they came up with Mangas to replace our Bible and that fueled liberal stupidity of today.
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