Saturday, November 26, 2011

Dear John Maynard Keynes: The Long Run Has Now Arrived

The IMF is warning Japan about its debt.
TOKYO—The International Monetary Fund warned in a new report that market concerns over fiscal sustainability could trigger a "sudden spike" in Japanese government bond yields that could quickly render the nation's debt unsustainable as well as shake the global economy.

The fund's Japan Sustainability Report, released on Wednesday, was a si to Tokyo policy makers that the international community is already worried about fallouts from Japan's potential fiscal problems, after debt problems in some European economies evolved into a Continent-wide crisis.

Japan's public liabilities amount to roughly twice annual economic output—a ratio worse than that of any other industrialized economy, including turmoil-hit Spain and Italy.
No country has done more to "stimulate" it's economy and "invest" in its future than Japan. Aging, debt-ridden Japan. If you thought it was a bad idea to loan money to those wacky Italians, then it might be bad idea to loan it to those sober Japanese, too.

Fortunately for the Japanese, their debt is almost entirely held within Japan. They're not in any trouble unless there's some kind of jump in the number of retirees who need to take their savings out of the government bond market to live on.



Secular Apostate said...

Please. Tell me one more time the 1980s story about the impending destruction of America caused by the Japanese government's "partnerships" to develop HDTV and Fifth Generation computing. And why, if Congress doesn't subsidize these technologies, we'll be left sucking the dust of the Japanese economic juggernaut, scrabbling bits of food out of the rubble.

Dana said...

I'd sure like to see the same chart for American demographics!

Doo Doo Econ said...

Consider how the european debt crisis will impact bond prices around the world...not good

tim eisele said...

I still kind of suspect that the Japanese are hoping that they can develop sufficiently good robots that they can either build "replacement teenagers" for labor-intensive jobs, or patch up their old people well enough that they can continue to work as if they were younger.

This may seem far-fetched, but I don't know. 50 years is a long time. A lot can happen in that time. Maybe the horse will even learn to sing.

B-Daddy said...

The U.S. chart looks a lot different. The difference is that we have immigration. The U.S. has a demographic bulge, but not near so bad.