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Japanese Economic and Debt Crisis: Is Japan the Next Greece?


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#1 Michaelangelica

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Posted 17 July 2010 - 12:31 PM

Japanese Economic and Debt Crisis: Is Japan the Next Greece?
With a public debt to GDP ratio of about 200%, Japan is the most indebted major economy in the world.

If this were the public debt ratio of the United States or the UK, both nations would be experiencing a catastrophic sovereign debt crisis.

If this was the public debt correlation in Greece, Athens would already be insolvent and for sale.

But until now, Tokyo had the luxury of incurring increasingly heavy debt loads, owing to a nation of patriotic savers willing to loan the government money at absurdly low interest rates. But no longer.

Global Economic Crisis » Japanese Economic and Debt Crisis: Is Japan the Next Greece?
Just what is propping up the Yen?
Why isn't it in freefall?

By certain measures, Japan's debt load is worse than that of Greece.

Japan's outstanding long-term government debt is set to reach 862 trillion yen at the end of March 2011, or 181 percent of the country's gross domestic product, the Ministry of Finance says.

If short-term debt is added, Japan's liabilities will hit 197 percent of GDP this year and 204 percent in 2011, the highest among advanced economies and far worse than Greece's debt-to-GDP ratio of around 130 percent, OECD figures show.

http://www.stuff.co....the-next-Greece

If that is combined with a significant loss of faith among Japanese in domestic investments, the government would lose its most important source of funding debt.


Is it just surviving on faith and hope?

As noted by Kan, the consequences of a collapse in Japan's finances would be different. Under such a scenario, there might not be any country or agency like the IMF able to rescue Japan, he said.


http://www.huffingto...i_b_467727.html

#2 Michaelangelica

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Posted 15 August 2010 - 11:30 PM

Although Japan has made progress toward developing a more transparent, rules-based system, the problems of nontransparency and weak accountability have not disappeared.

policy mismanagement has aggravated the problems and prolonged the processes of recovery.

difficult for the Japanese state to implement the reforms necessary to get back on track

Yen Appreciation: Another underlying cause of the bubble, sustained asset deflation, and the liquidity trap is the steep, long-term appreciation of the yen relative to the dollar. For Japan, yen appreciation has been a chronic problem. Exchange-rate factors have limited the effectiveness of certain policy tools that might have cleaned up Japan's financial mess. Caught in a classic liquidity trap, for example, the option of designing monetary policy to hit specific inflation targets would be difficult, in part because a sudden, sharp devaluation of the yen would put enormous pressure on South Korea and Taiwan to devalue their currencies. In an era of global capital flows, the constant national need to make adjustments in the value of key currencies, and the costs of overshooting, misalignment, and potential speculative attack have enormously complicated domestic macroeconomic management.

Causes of Japan's Economic Stagnation - Shorenstein APARC

THE ECONOMIC CRISIS IN JAPAN: Mainstream Perspectives and an Alternative View - Critical Asian Studies

The Bank of Japan’s monetary policy from the late 1980s onward, however, was increasingly out of step with US or other developed country norms. In particular, the Bank of Japan’s limited response to deflation after being granted independence in 1998 stands out as a dangerous and unusual stance.

Japan's Financial Crisis and Its Parallels to US Experience -- Adam S. Posen, Ryoichi Mikitani, Peter G. Peterson Institute for International Economics

ISTM this economy -as big as China's- is a disaster waiting to happen.
Who would be able to bail it out?

#3 maikeru

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Posted 16 August 2010 - 09:57 AM

Bailout Japan? Maybe the tooth fairy? I've been watching this as well and a friend sent me a news story about Japan's dire situation. It's just breaking here in the States.

I just looked at this chart on Wiki, noted Japan owes $700,000+ per capita for external debt:

List of countries by external debt - Wikipedia, the free encyclopedia

Frightening.

The USA is not in great shape, either.

#4 Michaelangelica

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Posted 16 August 2010 - 07:52 PM

Bailout Japan? Maybe the tooth fairy?


Frightening.

The USA is not in great shape, either.

No but maybe the USA can just keep printing money, while everyone believes it is worth something they will be OK?
At 14 trillion they(USA) are far and away the bigger/est economy-- than nearly everyone else combined

Seems not a lot of the banking/structural problems that caused the sub-prime crisis have changed/been fixed

Meanwhile the rich get richer . . . and the first to go will be pensions.

#5 dduckwessel

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Posted 31 May 2011 - 11:27 AM

As far as I knew, Japan was the technology king. I've been wondering who is going to fill the technological 'hole' that's been left due to Japan's demise. Do you think that either Korea or China will fill the vacancy, or perhaps the U.S.?

#6 Katherine Reeds

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Posted 20 June 2011 - 07:22 AM

This solely depends upon the work for which the loan is being taken, It depends for what rate the revenue is coming back and the ratio by which Japan can return the loan

#7 CraigD

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Posted 23 June 2011 - 09:01 AM

Bailout Japan? Maybe the tooth fairy? I've been watching this as well and a friend sent me a news story about Japan's dire situation. It's just breaking here in the States.

I just looked at this chart on Wiki, noted Japan owes $700,000+ per capita for external debt:

List of countries by external debt - Wikipedia, the free encyclopedia

It’s been almost a year since maikeru posted this, but reading from the Wikipedia article he gives, I see the per capita external debt of Japan as US$17,546, much lower than the US’s $46,577, and lower than 30 other countries on the list.

From this, I wouldn’t guess that Japan has a debt crisis.

As far as I knew, Japan was the technology king. I've been wondering who is going to fill the technological 'hole' that's been left due to Japan's demise. Do you think that either Korea or China will fill the vacancy, or perhaps the U.S.?

To paraphrase Mark Twain, I believe reports of Japan’s demise are greatly exaggerated. ;) Japanese company Sony has had a rough year or two, but is still a big technology (and, perhaps more important as a business, intellectual property holding) company ($88 billion revenue, $189 B assets), though not as big as Korea’s Samsung ($173 B revenue, $295 B assets)

Personally, I find economics on national or world scales a bewildering and vague discipline. I tend to hold to the folk wisdom that economic crises are hardly ever as significant to a person as smaller scale ones, such as “your house is on fire or “there is no food to be found anywhere” type crises.

#8 geko

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Posted 23 June 2011 - 02:49 PM

Personally, I find economics on national or world scales a bewildering and vague discipline. I tend to hold to the folk wisdom that economic crises are hardly ever as significant to a person as smaller scale ones, such as “your house is on fire or “there is no food to be found anywhere” type crises.


I'd imagine that's probably a general opinion among most people. I think the reason for it though is that the effects of an economic crisis on national and global scales are experienced over a period of time rather than all in one go, such as it would be with your house burning down, but the compounding effects of busts will slowly but surely add up until everyone experiences a total loss of something approaching the same scale as having your house burnt down, no doubt sometimes even more, although of course sometimes less.

In general, technological progress increases efficiency, and this, other things being equal, will cause prices to follow a downward curve, but how many times have you experienced an increase in price for the same goods (even though there has been numerous years of progress in the industry)? The older you are the more you will have noticed. These are the effects of ongoing macro market stimulation (among other things), a stimulation that's sent into overdrive during economic crises' and 'busts'.

Already people have begun experiencing an increase in some of the lower consumption goods, like food, but have yet to see any increase in their salaries (which they won't for a while yet). Depending on how far you are above the 'bread line' will, i guess, determine how acute your experience of an economic crisis is. Although in the long run everyone's loss compounds into a small fortune.

#9 charles brough

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Posted 22 August 2011 - 11:45 AM

This is rather alarming. If the problem grows with the Euro and here in the US, Japanese investors seem sure to start putting more of their savings into gold and other currencies. The potential for a serious world economic crisis is growing.

#10 ivantheboss1

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Posted 23 August 2011 - 10:07 AM

This is rather alarming. If the problem grows with the Euro and here in the US, Japanese investors seem sure to start putting more of their savings into gold and other currencies. The potential for a serious world economic crisis is growing.

I agree,there is too many signs of new economic crisis

#11 Meryem

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Posted 11 January 2012 - 09:18 AM

Although I haven't studied much about Japanese economic structure but I can surely say that they are not in any financial mess. For only recently I read in newspapers that Japan is sitting pretty on a big pile of foreign currency reserves which was mentioned somewhere near $1.3 Trillion. Which I think is good amount of foreign currency reserve to play with for credit rating factors etc. of a economy.

#12 pellicle

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Posted 12 November 2012 - 10:13 PM

I also understood that Japan wasn't in such a bad situation as the indicators being applied to it do not cover that much debt in the government is owed to the Japanese citizens (rather than to OS nations)

People have been predicting the massive downfall of Japan as if its next month since I worked there in the last century.

Still have clean streets, still have good public transport and still have good infrastructure.

If that's stagnation its looking better than Sydney Australia that's for sure

#13 Racoon_v2.0

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Posted 13 November 2012 - 10:31 PM

So when are China and Japan going to go to War again?
They Hate each other. Rape of Nanking, and all that..
Asians don't forgive that stuff

#14 Guest_MacPhee_*

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Posted 14 November 2012 - 10:14 AM

I also understood that Japan wasn't in such a bad situation as the indicators being applied to it do not cover that much debt in the government is owed to the Japanese citizens (rather than to OS nations)

People have been predicting the massive downfall of Japan as if its next month since I worked there in the last century.

Still have clean streets, still have good public transport and still have good infrastructure.

If that's stagnation its looking better than Sydney Australia that's for sure


Yes - I intensely admire the Japanese people. They are intelligent, cultured, organised and industrious. In their hands, Japan would never become a second Greece. Such a downfall could only happen if Japan were overwhelmed by foreign invaders.

And isn't that what's happening to Australia. It was a great country till recently. Then the invasion of deadly multi-culturalism started. Now it's probably doomed to Third-World ignominy within 30 years.

Such a shame, but what can be done about it?