End Game

Dec 28, 2012 3:57 PM

Offline

Sep 2011

The end game has come for Japan. Here is a summary of the current economic situation in Japan.

:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
Today Japan has a debt to to GDP ratio of over 230% and exponentially increasing debt and future obligations/liabilities.

The economy is facing deflationary trends while manufacturing is down, the Japanese Yen fell 5% AGAINST THE DOLLAR IN ONE MONTH*.

Government spending regardless of economical decay continues to grow and is over 40% of the entire economy.

The government is having JGBs issued by the BOJ at the same time the BOJ prints money to buy more JGBs in effect funding government spending by debasing the Yen.

Self financed debt is no longer possible as the interest payments are massively larger than total imports even at near zero rates.
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

Here is a couple interesting things to note:

1) while inflation does indeed reduce the debt there is a non-linearity between debt reduction and costs. Basically a simple way to think about this is that inflation that reduces debt by 1 trillion Yen also increases costs by 2 trillion Yen. Thus inflation is actually counter productive in trying to pay off debt.

2) Too much inflation destroys savings and wealth. In response there is ironically less money to invest in the economy and thus less or even negative economic growth occurs. In effect inflation also decreases government revenues.

3) What use to be the largest sellers of JGBs are now the largest buyers

4) The JGB market is expected to collapse within 2-3 years from now.

5) Japan has reached a point of no return. They will default on their debt.

* The current administration is trying to inflate their way out of their debt problem which is debasing their currency at a faster pace than the US dollar debasement. This is a rather impressive feat as the Federal reserve has started QE infinity which involves 85 billion dollars to be poured into the economy monthly until unemployment falls to acceptable rates.

Thus comes the end game. Will the economic collapse lead to the rise of nationalism? Will the economic pains kill rule of law? What is the end game for Japan and how will it play out? What do you think?

Dec 28, 2012 4:14 PM

TallonKarrde23

Offline

Jun 2007

5649

Japan's been in a recession for like 50 years, it's not really going to ever matter.

Dec 28, 2012 4:32 PM

ShinRhe

Offline

Sep 2011

TallonKarrde23 said:
Japan's been in a recession for like 50 years, it's not really going to ever matter.

It is true they have been in recession for a very long time, but for that period of time self financed debt has kept them from going into depression. The economic consensus is that Japan within 2-3 years will enter a massive depression because self financed debt is no longer possible.

Dec 29, 2012 7:39 AM

CuriousThing

Offline

Feb 2012

1918

The election of Shinzo Abe was a huge step in the right direction. I expect to see Japan's exports rise by the next few years.

See All Discussions

Sticky: » The Current Events Board Will Be Closed on Friday JST ( 1 2 3 4 5 ... Last Page ) Luna - Aug 2, 2021	272	by traed »» Aug 5, 2021 5:56 PM
» Third shot of Sinovac COVID-19 vaccine offers big increase in antibody levels: study ( 1 2 ) Desolated - Jul 30, 2021	50	by Desolated »» Aug 5, 2021 3:24 PM
» Western vaccine producers engage in shameless profiteering while poorer countries are supplied mainly by China. Desolated - Aug 5, 2021	1	by Bourmegar »» Aug 5, 2021 3:23 PM
» NLRB officer says Amazon violated US labor law Desolated - Aug 3, 2021	17	by kitsune0 »» Aug 5, 2021 1:41 PM
» China Backs Cuba in Saying US Should Apply Sanctions To Itself Desolated - Aug 5, 2021	10	by Desolated »» Aug 5, 2021 1:36 PM

End Game

More topics from this board

Sticky: » The Current Events Board Will Be Closed on Friday JST ( 1 2 3 4 5 ... Last Page )

» Third shot of Sinovac COVID-19 vaccine offers big increase in antibody levels: study ( 1 2 )

» Western vaccine producers engage in shameless profiteering while poorer countries are supplied mainly by China.

» NLRB officer says Amazon violated US labor law

» China Backs Cuba in Saying US Should Apply Sanctions To Itself

MoreTop Anime

MoreTop Airing Anime

MoreMost Popular Characters