[QUOTE]Japan has been piling up debt for years. Over two decades, the government of the world's second-largest economy has borrowed staggering sums of money to fund domestic stimulus spending. Much of the spending has produced public goods of questionable value, the Japanese equivalents of "bridges to nowhere."
This profligate borrowing has left the island nation with ratio of debt to gross domestic product (GDP) nearing 200%, almost double that of troubled Greece (113%).
Japan's government debt has more than tripled since 1992, and that doesn't include local government borrowing, the equivalent of state and county municipal bonds in the U.S.
How has Japan been able to sustain a debt load that would have crushed other economies long ago?
Saving -- and Retiring
The answer lies in a dynamic few nations share: a populace which saved an extraordinarily large percentage of its income, and then invested those savings in its own government's debt. More than 90% of Japan's government bonds are owned by its people.
In effect, Japan's soaring debt was self-funded. As long as the Japanese people saved trillions of yen and handed them to their government for 1% interest, then the government had a cheap and seemingly limitless supply of low-cost money to tap.
But demographics are finally putting the squeeze on this arrangement. As Japan's population ages, the nation's savings rate is plummeting. A recent report from the McKinsey Global Institute summed the situation up succinctly: Japan: The World's Savers Retire.
The consequences are visible in this chart, which shows that Japan's savings rate is slowly dropping to zero.
[img]http://www.blogcdn.com/www.dailyfinance.com/media/2010/08/japan-savings7-10.png[/img]
Why is the savings rate falling so dramatically? As workers retire, they stop saving as their income declines in retirement. They need cash to live and cover the costs of aging -- additional health care, home care, etc. -- so they sell their investments (often Japanese government bonds) to raise cash. This puts double pressure on bonds: buying dries up and selling accelerates.
Japan Faces a New Reality
The net result of this demographic trend toward lower savings means Japan's government must soon start competing on the world market for capital. In other words, it must start selling its bonds to international investors since its own savings will no longer be substantial enough to fund its enormous debt.
For two decades, Japan's fiscal policy has operated on the assumption that the government can always borrow money at very low interest rates. But as domestic demand for government bonds declines, the government will have to raise interest rates to attract buyers.
Currently, Japanese ten-year Treasuries currently yield 1.3%, compared to U.S. bonds yielding 3.5% or German bonds offering 3%. Facing international competition for capital, Japan will have little choice but to double or even triple the interest rate paid on its bonds. This jump in servicing costs will place impossible pressures on the nation's budget, as roughly 40% of all tax revenues have long gone to paying interest on Japan's ballooning debt.
Global Implications
The consequences of Japan's declining savings rate and the necessity of paying higher interest rates will not stay bottled up in Japan. As the second-largest holder of U.S. government debt behind China, Japan may decide to start selling some of its hundreds of billions of dollars in U.S. Treasuries. That would put pressure on the U.S. Treasury, which already must sell $1.5 trillion in new bonds every year, in addition to rolling over hundreds of billions in bonds which mature.
As Japan's need to sell bonds on the global market increases, the world may see an increasingly desperate competition for global capital arise, as all nations seeking to fund their sovereign debt must raise the yield (the interest rate) they pay on their bonds. That would dramatically raise the interest costs each government pays annually, further pressuring their other spending priorities.
If Japan's cheap debt balloon finally does pop, the consequences will reverberate throughout the global economy.
[/QUOTE]
Source: [url]http://www.dailyfinance.com/story/investing/japans-cheap-debt-could-cost-the-world-plenty/19579257/[/url]
I guess the anime body pillow market just can't fill the gap. :frown:
Wait, I thought all Japanese worked hard, didn't collect welfare, and they don't have swarms of illegal aliens(ie Mexicans) sucking up their resources? So why isn't it paradise over there with money falling out of people's pockets?
You mean if we(the US) kicked out all illegals, and made people get jobs instead of welfare, it WOULDN'T cure all our problems? I don't believe it.
[QUOTE=cecilbdemodded;23953513]Wait, I thought all Japanese worked hard, didn't collect welfare, and they don't have swarms of illegal aliens(ie Mexicans) sucking up their resources? So why isn't it paradise over there with money falling out of people's pockets?
You mean if we(the US) kicked out all illegals, and made people get jobs instead of welfare, it WOULDN'T cure all our problems? I don't believe it.[/QUOTE]
I can't tell if this is sarcasm or not.
I heard the Japanese live so long that almost half their life is spent in retirement... Think about how much that costs the economy after you read this article.
Japan is entering a very, very fucked time for them. The workforce now is about to retire over the next 10 years, and the workforce that's coming in now isn't nearly numerous enough to replace them.
Japan is going to enter a lot of turmoil in the next 5 years. Worse than the US or any other modern nation.
Perhaps building 50 ft robot statues wasn't a wise investment.
[QUOTE=Carbon Knight;23953642]Perhaps building 50 ft robot statues wasn't a wise investment.[/QUOTE]
They needed those to fight the huge monster that were coming in, so I believe it was :colbert:
[QUOTE=Carbon Knight;23953642]Perhaps building 50 ft robot statues wasn't a wise investment.[/QUOTE]
They took the first one down, then built the second one maybe they reused the old one,I checked last week it wasn't in the location that it was said to be in. Japanese living long is probably because they eat a lot and sweat a lot from the heat that goes on everyday till like 6pm, sunrise at like 4-5am.
let's nuke em again
[QUOTE=bobste;23954469]let's nuke em again[/QUOTE]
It was a Whale and Dolphin. Remember?
:ssh:
[QUOTE=cecilbdemodded;23953513]Wait, I thought all Japanese worked hard, didn't collect welfare, and they don't have swarms of illegal aliens(ie Mexicans) sucking up their resources? So why isn't it paradise over there with money falling out of people's pockets?
You mean if we(the US) kicked out all illegals, and made people get jobs instead of welfare, it WOULDN'T cure all our problems? I don't believe it.[/QUOTE]
thank god someone made this thread about politics
[QUOTE=HumanAbyss;23953640]Japan is entering a very, very fucked time for them. The workforce now is about to retire over the next 10 years, and the workforce that's coming in now isn't nearly numerous enough to replace them.
Japan is going to enter a lot of turmoil in the next 5 years. Worse than the US or any other modern nation.[/QUOTE]
The US is going into a similar but less harsh phase, as the Baby Boomer generation retires, the younger population cannot keep up. Our own older senior population is rising faster than the younger population by a significant ratio.
I blame the Baby Boom... which was caused by the end of the depression and WW2, which again is due to Idiot stocks and Hitler... which aga-
Oh dear, their Utopian metropolis was built on staggering amounts of debt. Bad buzz.
Monetary system at its finest. Welcome to the world of capitalism.
[QUOTE=cecilbdemodded;23953513]Wait, I thought all Japanese worked hard, didn't collect welfare, and they don't have swarms of illegal aliens(ie Mexicans) sucking up their resources? So why isn't it paradise over there with money falling out of people's pockets?
You mean if we(the US) kicked out all illegals, and made people get jobs instead of welfare, it WOULDN'T cure all our problems? I don't believe it.[/QUOTE]
This doesn't actually relate to the article, there were no mention of illegals or jobless in the article. Their problems are from a different source. Having people on welfare and swarms of illegals would only compound their problems.
[QUOTE=cecilbdemodded;23953513]
Wait, I thought all Japanese worked hard, didn't collect welfare
[/QUOTE]
Don't assume.
If this continues then maybe we'll reach a point where Facepunch can pool together and buy Japan. The question is what to do with it.
[QUOTE=Reborn9;23958748]Monetary system at its finest. Welcome to the world of capitalism.[/QUOTE]
Have you just learnt about that or something? You're constantly bringing it up in threads.
[QUOTE=cyanidem;23959970]Have you just learnt about that or something? You're constantly bringing it up in threads.[/QUOTE]
No. I've known about it for a while now. I just like to rub into the faces of the people who still support this retarded system.
[QUOTE=bobste;23954469]let's nuke em again[/QUOTE]
I'd much rather blow up a few more pissy buildings in New York.
the world's going to go belly up soon enough
I wonder what's going to follow
probably going to be a few multinational corporations are going to buy out some land and create their own countries
[QUOTE=bobste;23954469]let's nuke em again[/QUOTE]
That wasn't funny. :saddowns:
[QUOTE=bobste;23954469]let's nuke em again[/QUOTE]
you'd risk creating something far worse than anime
Isn't this because they all love gambling at those gashapon machine things?
Well now I know where to travel to for job opportunities.
They spent it all on karaoke.
[QUOTE=The Vman;23953534]I can't tell if this is sarcasm or not.[/QUOTE]
Yeah, it's hard to get sarcasm across in a written post.
I wrote it because lately in real life I've been surrounded by people all repeating the same mantra over and over again- the poor and/or 'immigrants' (ie nonwhite people) are responsible for dragging this country down. Reading about Japan's problems made me think of those people.
New Pokemon game in a month, the economy will skyrocket.
Introducing: the anime tax
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