Japan not in Public Sector Debt death-spiral

[Mulboyne]

[bejiita]

Japan's debt is Y$703 trillion at the end of fiscal 2003. This converts to US$6.441 trillion.

The U.S. debt is US$7.253 trillion as of July 2004.

Looks like the U.S. is still ahead. U.S.A. U.S.A. U.S.A.

[Mulboyne]

This Article from the FT shows how that debt/GDP ratio can swing a whole argument around.

Nowhere, as new research by Bank of America documents, is leverage higher than in Japan.
Gross government debt, according to Ministry of Finance projections, will reach 161 per cent of gross domestic product this year, compared with about 66 per cent in the US and Germany.
...Assume - entirely reasonably - that growth in real narrow money slows from 8 to 6 per cent a year and that yields rise to 3 per cent. Then, even if GDP growth sustains a healthy clip of 4 per cent, BofA calculates that Japan's sustainable debt/GDP ratio will shrink to just 116 per cent.

If the other guys are right then that ain't a problem because we are already down in the 60% range.

[Mulboyne]

[Mulboyne]

[Number11]

The debt you owe yourself is certainly different than the debt you owe others. The fed printed money to offset the massive US deficit this year and the money has been hoarded away in banks, so it's not in the economy to raise inflation yet. The only way the US can fiscally survive starting next year is to double or triple the tax rate and devalue the dollar/renege on the debt payments held by China and Japan as they both wean themselves off treasuries next year.

Japan is in no more fiscal danger than the US, or any other country, except for the planetary outhouse we'll all be in in a few years thanks to the fiscal irresponsibility of the US. The US has been far more irresponsible than Japan.

I'm glad I'm not young or in the middle of a career. You youngsters are going all going to be fucked, gaijin or not.

[james]

I'm glad I'm not young or in the middle of a career. You youngsters are going all going to be fucked, gaijin or not.

are you sure an intergenerational 'debate' is a can of worms you want to open here?

[FG Lurker]

I'm glad I'm not young or in the middle of a career. You youngsters are going all going to be fucked, gaijin or not.

Fucked? If I was an old fart relying on a pension I would be scared shitless right now. If JAL can default on their pension payments then pretty much anyone can, and as the yen rises and profits fall more "restructuring" is bound to follow. Nenkin is going to need "restructuring" too, pyramid schemes don't work very well when the pyramid gets flipped on its head.

We're all fucked, but at least those of use younger than middle age have some hope of recovering...

[canman]

I'm not an economist, nor do I pretend to be one, but I keep hearing about how Japanese debt is internal, or they have borrowed from themselves or the pension system or whatever. Whereas the US has borrowed from the Chinese and Japan to keep itself going.
Now I could be wrong, but if Japan defaults on its loans then it is stiffing its own people and the whole house of cards comes tumbling down. If the US defaults on China or Japan, then we have a war, but at least they aren't stiffing their own people right? Or is that too simple.
Also as for the JAL staff, and their outrage at the pension cut being floated, I guess I understand their anger, but after seeing how large these pensions are, and it is only a 30% cut, isn't better than a 100% cut if the company defaults completely. Part of the trouble the company is in is the high salaries and benefits they were paying out in the past, so in a way these retired workers are somewhat responsible for the position the company is in. Now I understand there was gross mismanagement, and JAL was forced to fly into every stupid little airport that the LDP cronies built, whether cost efficient or not, but that is in the past and people have to go forward from now on. Take the cut and hope that things will turn around quickly. But also demand more accountability from the top managers.

[Mike Oxlong]

Isn't the financial situation with China and other creditor nations to the US kind of like the Cold War with the Commies? Mutual assured destruction if either side presses and perceived advantage or slight from the other...

[Christoff]

not if they sell them for Euros