Posted on 12/25/2009 6:19:58 PM PST by UAConservative
Yukio Hatoyama, the new Japanese Prime Minister, has stunned a nation already mired in huge public debt by unveiling the country’s biggest ever postwar budget: a 92.3 trillion yen (£630 billion) spending spree aimed at “saving people’s lives”.
The unprecedented budget, which supposedly shifts Japan’s fiscal spending focus “from concrete to lives”, comes amid rising concern about the solidity of sovereign debt in the world’s second-largest economy.
The new budget will require additional debt issuance of Y44.3 trillion — within the Government’s expected band, but still at a level that will raise Japan’s debt-to-GDP ratio to nearly 195 per cent.
Of foremost concern, analysts for Nomura said, is that Japanese tax revenues are expected to fall to Y37.40 trillion this year, the lowest that they have been since 1984. It was, analysts said, a watershed moment — the first time that new debt issuance has exceeded tax revenues since the Second World War.
Mr Hatoyama said: “We were just able to stay at a level in which we can maintain fiscal discipline.”
Mr Hatoyama swept to power in August with grand promises that the era of wasteful public spending would end. Japan’s unnecessary and notoriously expensive “roads to nowhere” public works projects would be curtailed and the money diverted to supporting beleaguered households.
(Excerpt) Read more at business.timesonline.co.uk ...
Japan feeling the same effects of Mr. Hopey-Changey. Trust us Tokyo, we know how you feel.
WTF is going on??? This is like the old B movie sci fi films where aliens take over the bodies of the local leadership.
The question is answered. Insanity is contagious.
The problem with many countries building up massive goverment debt is that eventually you have to pay the piper. It does no good to kick it down the road because that is only delaying the inevitable. The way so many countries is building up debt these days that the bubble is going to burst sooner rather than later. I see a day of reckoning close at hand. Taxes will never be able to cover the debt. Excessive inflation will hit and when it does there will be worldwide revolutions and citizens storming their governments en masse a la the American revolution which as its battle cry was “Taxation without representation is tyranny!” This will be the cause selebre throughout the world and I think it will be coming very very soon. My guess it will start in either Asia or Europe and when it does the pols in Washington DC are gonna be scared shitless that it will be contagious here.
At least roads to no-where can lead to the development of undeveloped land.
Social spending only leads to dependence and in the end more social spending.
Fedzilla respects no borders. Everywhere he goes, spending and chaos follow in his wake.
looks like YEN is no longer safe haven. Those who run for USD to YEN will get burned as well. Gold/silver is the only choice
Not so. Lead is better.
I generally agree, but I think the revolution will more closely resemble the French Revolution, as far as the various Old Regimes may experience fleeting chills at the backs of their necks.
Especially if it is a lead-copper-brass alloy ;)
Other countries, (Japan appears to be merely ahead of the curve) are engaging in competitive devaluations of their currencies to make sure that their exports remain viably priced in a world economy where the US dollar is devalued vs. their currencies.
The US dollar hit levels of just above 85 yen to the dollar, before rebounding to where it is now (about 91 yen to the USD). The US dollar is at about 1.43 Euros, etc, etc.
The recent flap with sovereign credit in Dubai and Greece sent a bunch of traders flocking back into the US debt markets (at the very short end of the curve), but that won’t last forever.
Put yourself in the shoes of (insert export-to-US dependent nation here): The US dollar has been sliding. The US is issuing debt into the world markets at a ferocious clip.
You have two choices:
1. Follow the path of “sound money” - and take your lumps as your export-driven economy slides ever deeper into economic spin/stall, because as your currency appreciated vs. the USD, your exports become more expensive in the US...
or
2. You follow the US lead. You print money, sell debt (and remember that all debt issuers are competing for the same pot of money, ie “what is left out there to invest”) and devalue your own currency as a result. You thereby slow or thwart the devaluation of the USD vs. your currency and keep your exports to the US affordable.
We’re quickly passing into a never-never land of macro-economics at the level of sovereign balance sheets. Sovereign debt ratings quickly lose their value when everyone is issuing debt at unsustainable levels...
I've been attempting to explain how fiat money and massive debts will destroy any currency (including yen or USD), especially some of my close family who want to try currency trading. They see the cost of silver and gold and want to avoid it, but that's the price of true security in investment.
Another member of the "what we were sent here to do" club?
Jack Benny was in England once and asked a shopkeeper how much a certain item cost. The shopkeeper said 2p. Jack thought about it and thought about it and then thought about it some more until finally the shopkeeper said, “Are you going to buy it or not?” Jack looked at the shopkeeper and said, “2p or not 2p...that is the question.”
I gotta go with Europe myself. Berloscotti (sp?) and the Pope being attacked in one week portends dark days for European leaders (or leaders who happen to be in Europe).
Japan is another “modern” country who has a nominal democracy, but in fact, it is impossible change.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
~~Ludwig Von Mises
C 16
Yep. They'll try to keep the music playing for as long as possible even though there ain't a damned chair in sight.
They are busy preparing their own rat lines and lifeboats, in secure compounds with lots of diesel for the generators.
Yea, like that'll help.
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