DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - Could Japan's Gluttonous Spending Trigger A U.S. Financial Collapse?

**HunterM** · 10-21-2009, 09:26 AM

This is the stuff of nightmares:
http://www.nytimes.com/2009/10/21/bu...l?ref=business

Here is my question after reading this:

If Japan runs out of lenders for it to borrow money (right now it relies mainly on its own population for cash), it could trigger a currency crisis in Japan and force Japan to sell off investments it owns to raise cash.

One of the largest national assets Japan holds is U.S. bonds (Treasury debt). If Japan dumps its bonds and cuts off reserve purchases to keep their spending machine operating, that could trigger the same behavior in our own country, which will then grow and ensnare more deficit-running countries such as ours.

Sovereign bond prices in the US would crash and drive up yields to astronomical highs, making more borrowing by the Treasury, and Congress, impossible.

It's a deadly timebomb waiting to go off.

10-21-2009, 09:26 AM	#2
HunterM Join Date Oct 2005 Posts 366 Senior Member	Could Japan's Gluttonous Spending Trigger A U.S. Financial Collapse? This is the stuff of nightmares: http://www.nytimes.com/2009/10/21/bu...l?ref=business Here is my question after reading this: If Japan runs out of lenders for it to borrow money (right now it relies mainly on its own population for cash), it could trigger a currency crisis in Japan and force Japan to sell off investments it owns to raise cash. One of the largest national assets Japan holds is U.S. bonds (Treasury debt). If Japan dumps its bonds and cuts off reserve purchases to keep their spending machine operating, that could trigger the same behavior in our own country, which will then grow and ensnare more deficit-running countries such as ours. Sovereign bond prices in the US would crash and drive up yields to astronomical highs, making more borrowing by the Treasury, and Congress, impossible. It's a deadly timebomb waiting to go off.
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