Job Discussion Forums

[rxk22]

I am curious, as there are a lot of doom and gloomers as well as 'it's 100% OK' articles out there. None of which, I think really truly cover Japan's situation well.

Japan's govt is still in a massive spending deficit, something around 49% of the budget is made on bonds. Which is scary. On the other hand, the interest servicing of it are still pretty low.

I was hoping that Abe(I know) would be able to kick the deficit, and pay down the debt before the population started to decrease, and the tax base with it.

What is your outlook ,and you reasoning?

[Pitarou]

The optimists basically have one argument in their favour: People have been predicting doom for years, and it hasn't happened yet. This is called "the fallacy of inductive reasoning". Go look it up.

The writing is on the wall. The financial statistics are beyond debate. It's just unavoidable: Japan is financially doomed. It's as clear and as simple as that.

When you're deciding which pundits to believe, notice who gives you facts and figures, and who gives you vague handwavy stuff. I find that every time an optimist says something like, "Don't worry. Japan still has x to fall back on." a pessimist gets his calculator out and shows just how small x really is compared to the scale of the problem Japan is facing. Whatever the "solution" is, Japan's problem turns out to be much, much bigger. It's much worse than Greece, for instance.

Yes, Japan still pays low interest on its bonds. But the only people buying bonds at those prices are the Bank of Japan, and they do it by conjuring money into existence at the stroke of a pen. There is a fine line between "quantitative easing" and "debt monetisation", and the BoJ crossed that line a long time ago. This "Zimbabwe solution" is the only real policy success of Abenomics. The "structural reforms" that Japan so desperately needs have been blocked by vested interests.

Sooner or later, the other shoe will drop, there will be a "qualitative shift in market perception", the yen will probably fall to less than half its present value, and there will be carnage in the markets.

Those in the know have been quietly moving their financial assets out of Japan for some time. (For instance, those few large established Japanese firms with a healthy balance sheet have been on a massive overseas acquisition spree in recent years.) If you wait until it hits the fan, it may well be too late: you may well be blocked from moving your money out of the country, just like the people of Cyprus and Iceland were.

[rxk22]

That is more or less in line with what I have been thinking. I was hoping for rainbows and sunshine...
I really was hoping that the govt would squash the debt and not inflate it's way out. Seems like Keynes is their advisorif you know what I mean.

The banks, according to bloomberg hold 41% of the Japanese debt in bonds. I guess that ratio will go higher, as no one would want a bind with a ~1% yield. That worked when deflation was -1%. So you got a 2% yield that way.

This article is making me seriously reconsider coming back to Japan, http://articles.economictimes.indiatimes.com/2013-01-11/news/36279777_1_low-interest-rates-government-debt-japanese-growth

I could see the yen hitting 400 to the dollar to be honest. The new trade deficit is alarming as well. Yes Nuclear in Japan is awful, and was/is poorly run, but they are killing their economy now.

That and the farmers/construction. They just need to cut them off at this point. No reason to make all these roads and what not, esp with rural areas having population loses. I would like to see large family farms, instead of subsidizing some guy with 5 acres. I lived in Chiba, and saw that most holders had peasant sized plots.

Well it isn't just because of the current situation. With the yen devaluing, it was wise to convert that in foreign currency. And acquisitions are needed for domestic companies. Softbank just guaranteed it's future with Sprint.
I don't have much in yen, and even if I go back, I would still save my money in dollars,as it just makes sense too.

Well when the yen hits 400, they can always cash in their US bonds, and pay off the debt then

[Pitarou]

[rxk22]

I was hoping that he would massively cut the deficit and then work on the debt.

This article is interesting, talks on how a default may be better than austerity for Japan. Who knows?

http://noahpinionblog.blogspot.com/2013/06/should-japan-default_12.html

[Pitarou]

[Pitarou]

By the way, you asked for articles.

Here's an excellent talk by highly-respected Japan-pessimist Kyle Bass, which he gave about 9 months ago. In a sentence his message is this: Japan is all out of options.

http://media.chicagobooth.edu/Mediasite6/Play/f15d95d054e8442ab0cc1c60321383101d

[rxk22]

I was thinking that as well. It would take an actual crisis for the businesses and old people to willingly give up their benefits.

I think a smaller leaner Japan, can and will be successful. It will still have the all the export orientated industries, without the rural and old to hold it back.


Wow, yeah I really have nothing to say to this. I do not see how Japan will not go bankrupt. It may take a while, but I don't see how it won't. Seriously, WOW

[rxk22]

[Pitarou]

[steki47]

[Pitarou]

You paint quite an appealing picture. But I think the transition is going to be pretty ugly. In my most pessimistic moments, I see the pieces set out for a major war with China.

But that's just me scaremongering. I'm not really qualified to discuss the political situation.

[steki47]

[G Cthulhu]

[Pitarou]