[esanamaserrn]

Considering Japan is the world's second largest economy this doesn't bode well. Moreover, since we're going down the same path as Japan refusing to address TBTF and thus allowing these parasitic institutions to drag the economy down for the forseeable future...we could experience the same debt to GDP compounding in the years to come especially considering our aging demographics and deficit spending....

No one knows exactly when a country tips into a debt compound trap. But Japan must be close, even allowing for the fact that liabilities of the state Loan Programme (FILP) have fallen by 40pc of GDP since 2000.


"The debt situation is irrecoverable," said Carl Weinberg from High Frequency Economics. "I don't see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this."


Mr Hatoyama inherited a country that was already hurtling into sovereign "Chapter 11". The Great Recession has eaten up 27pc in tax revenues. Industrial output is down 19pc, even after the summer rebound; exports are down 31pc; the economy is 10pc smaller today in "nominal" terms than a year ago – and nominal is what matters for debt.


Tokyo's price index fell 2.4pc in October, the deepest deflation in modern Japanese history. Real interest rates have risen 300 basis points in a year. It reads like a page from Irving Fisher's 1933 paper, Debt Deflation Causes of Great Depressions...


"This is incredibly dangerous," said Russell Jones from the RBC Capital Markets.

"The rate of deflation is shocking. The debt dynamics are horrible and there is the risk of a downward spiral."

It is Japan we should be worrying about, not America - Telegraph