[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

[HunterM]

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.

[kasandrasikl]

Don't lose sleep over this kind of stuff.

You have no way to control any of this, and if it happens, it happens.

Might as well be well rested if it does.

[HunterM]

Don't lose sleep over this kind of stuff.

You have no way to control any of this, and if it happens, it happens.

Might as well be well rested if it does.

[Quigoxito]

Hmmm this reminds me of Pots and Kettles calling each other names.

[esanamaserrn]

US is triggering a currency war by flooding the world with liquidity and there is a race to the bottom of sorts particularly among the western powers. This is the problem with fiat currencies and having the dollar as the reserve currency. Right now Oil is jacking up again because of continuing weak dollar and Europe is rangling on whether to crank their printing presses to combat the US's money printing scheme to inflate away its debt. European exports are getting nailed. Only countries with semi-stable currencies are the ones with resources backing their currencies and low debt to GDP ratios. Brazil is particulary strong...

[ZX3URrBH]

Well at least they have a nice infrastructure to show for their dept....and supertrains! What have we got to show for ours?

[Senasivar]

Well at least they have a nice infrastructure to show for their dept....and supertrains! What have we got to show for ours?

Goldman-sachs.

[Dndjzirw]

Well at least they have a nice infrastructure to show for their dept....and supertrains! What have we got to show for ours?

Iraq.

[esanamaserrn]

Goldman Sachs= Financial engineering versus industrial engineering

Iraq & Afghanistan = Massive ordnance penetrators, wasting blood and treasure versus peace, prosperity and market stability.

[KJnbceja]

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.

Deadly?.. how so?
Deadly is such an ugly word.