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TL
Joined: 07 Nov 2004
Posts: 76
Location: Seoul
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 Posted: Thu Jan 14, 2010 3:26 am Post subject: A Global Fiasco Brewing in Japan |
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http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100002951/a-global-fiasco-is-brewing-in-japan/
Highlights from the article:
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| The IMF says Japan�s gross public debt will reach 227pc of GDP this year. This is compounding at ever faster speeds towards 250pc by mid-decade. |
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| Japan�s deficits are already within the hyperinflation �red flag� zone identified by historian Peter Bernholz (�Monetary Regimes and Inflation� .. the Bible on this subject) |
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| The country tipped into outright demographic decline in 2005. Households have already stopped adding to their stock of JGBs. As the aging crisis accelerates, the elderly are running down their assets. The savings rate will soon crash below zero. |
Things are going to get out of hand once the Japanese government begins borrowing from foreign investors and raising interest rates to attract buyers to finance the budget deficit. |
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G Cthulhu
Joined: 07 Feb 2003
Posts: 1373
Location: Way, way off course.
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| Posted: Thu Jan 14, 2010 11:38 pm Post subject: Re: A Global Fiasco Brewing in Japan |
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| TL wrote: |
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100002951/a-global-fiasco-is-brewing-in-japan/
Highlights from the article:
| Quote: |
| The IMF says Japan�s gross public debt will reach 227pc of GDP this year. This is compounding at ever faster speeds towards 250pc by mid-decade. |
| Quote: |
| Japan�s deficits are already within the hyperinflation �red flag� zone identified by historian Peter Bernholz (�Monetary Regimes and Inflation� .. the Bible on this subject) |
| Quote: |
| The country tipped into outright demographic decline in 2005. Households have already stopped adding to their stock of JGBs. As the aging crisis accelerates, the elderly are running down their assets. The savings rate will soon crash below zero. |
Things are going to get out of hand once the Japanese government begins borrowing from foreign investors and raising interest rates to attract buyers to finance the budget deficit. |
Ah, punditry! They've been predicting the fall of Japan for decades. One of them will get it right, one day. What you fail to remember is that Japan also has foreign assets in excess of US$2.5 trillion. If it really wants to, it can start converting that against JSB's. Hell, if it really wants to enter the 20th century, it could eliminate public debt overnight by changing the tax laws to make land have value against which to borrow or tax. Currently, Japan doesn't do this. It only allows it against *improvements* on land. Downside? The value of the yen would instantly drop by ~half: no one outside Japan would appreciate that!!
It's all a game of cards, wherever you are and however you cook the books. |
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slodziak
Joined: 17 Oct 2005
Posts: 143
Location: Tokyo
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| Posted: Thu Jan 14, 2010 11:53 pm Post subject: Re: A Global Fiasco Brewing in Japan |
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| TL wrote: |
Things are going to get out of hand once the Japanese government begins borrowing from foreign investors and raising interest rates to attract buyers to finance the budget deficit. |
つまらない yawn.
Old news. Another thing that Japan has in its favour is that over 95% of its debt is owned by Japanese. Compare this to the US or UK where the same percentage is owned by China, Middle Eastern sovereign funds and the market - now that is scary. |
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Imseriouslylost
Joined: 09 Nov 2009
Posts: 123
Location: Tokyo
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| Posted: Fri Jan 15, 2010 4:42 am Post subject: Re: A Global Fiasco Brewing in Japan |
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| slodziak wrote: |
| TL wrote: |
Things are going to get out of hand once the Japanese government begins borrowing from foreign investors and raising interest rates to attract buyers to finance the budget deficit. |
つまらない yawn.
Old news. Another thing that Japan has in its favour is that over 95% of its debt is owned by Japanese. Compare this to the US or UK where the same percentage is owned by China, Middle Eastern sovereign funds and the market - now that is scary. |
The United States of America is... made in China.
Bwahahahahahahaha x infinity. |
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Pitarou
Joined: 16 Nov 2009
Posts: 1116
Location: Narita, Japan
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| Posted: Fri Jan 15, 2010 10:48 am Post subject: |
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First rule of Economic forecasting: If it can't go on forever ... it won't. Japan still has a little room to manoeuvre, but it's going to have to pull off another economic miracle if it wants to pay off it's debts in reasonable time.
Can it be done? Maybe ... but there are significant obstacles: aging population (compounded by hostility towards immigrants), perverse education system, government that seems to be in the pocket of the construction industry, and so on. If I have hope for Japan, it's in Japan's talent for post-crisis self-reinvention (Meiji restoration, post-WWII reconstruction), but I'm not sure I want to be around during the crisis.  |
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