5 ms·

Japan is in the gutters and has a debt of 230% of GDP (twice of what Greece has), Spain has youth unemployment exceeding 50%, Greece needs another bailout, Euro

by mixmax 13y ago

Japan is in the gutters and has a debt of 230% of GDP (twice of what Greece has), Spain has youth unemployment exceeding 50%, Greece needs another bailout, Eurozone politics prevent banking union which seems to be a prerequisite for not breaking up the Euro. Those are just off the top of my head. There are plenty of laarge unsolved financial problems in the world, and with the intercommectedness of finance a problem in one place will inevitably have consequences in other places. I'm fairly certain we'll see another large crisis within the next 5 years.

daliusd 13y ago
You just dropped bunch of facts like they mean something. Task for you: list 5 top countries by assets owned by their citizens with percents. Show those numbers taking into account population size.
- mixmax 13y ago
  They do mean something, and are in fact worrying. I presume that the HN crowd will understand why, otherwise I'll gladly explain.
venus 13y ago
> Japan is in the gutters and has a debt of 230% of GDP (twice of what Greece has) Greece's debt is to foreigners. In a foreign currency. Big, big, BIG difference. Japan can erase its debt with a stroke of a pen. So could have Greece, actually, but at least someone would have complained. I mean it's ridiculous really. 230% GDP debt - it's a complete joke. Everyone knows it's unpayable, if it had to actually be repaid, which it doesn't. If you are exposed to that, you deserve what you're going to get, which is nothing. But that's OK, because no-one is exposed, because it's basically the Japanese Govt writing a bunch of cheques to itself, and the only effect will be to devalue the yen, if anyone cares, which they don't. Frankly Japan's debt is turning into a sort of glitch in the matrix where something is obviously wrong but no-one mentions it because to do so would be to prove that none of it is real anyway.
- mixmax 13y ago
  The bulk of Japanese debt is to large Japanese pension funds, so yes theoretically the government could just declare that the Japanese people wouldn't get their pensions and simply steal them, but somehow I don't think that's going to work... Btw. There's an interesting problem with the Japanese debt - if you look at Japanese demographics the population is aging rapidly. This means that the pension funds that hold the debt will have to sell out because the money needs to be paid out. Who will they sell to? Every major institution in Japan is already stuffed to the gills with bonds, so there are two options: print money or sell to foreign investors. Printing money is balancimg on a knifes edge ( which is what the Bank of Japan is currently doing). Currently Japan pays an interest of less than 1%, and yet they spend 25% of their turnover just on interest payments. If you print money inflation and thus interest rises. When they reach 4% they will spend 100% of their income just paying interest on their loans. They can of course print more money and keep depreciating their currency, but history shows us that that doesn't end well. Alternatively they can try to sell bonds to foreigners, but somehow I doubt that there are any takers unless the interest rate goes up. As a comparison Greece pays around 8%. I'm not saying that Japan will definitely go bankrupt, I'm just saying that there are some pretty big red flags, and maneuvering around them is going to be damn hard. Since there are equally hard problems elsewhere in the world economy (as I hinted at above) there's a real chance that something somewhere goes awfully wrong.
  - venus 13y ago
    I don't really disagree with you but you're operating on the assumption that the Japanese Gov't will continue playing "the game". Bear in mind there is absolutely nothing stopping them simply declaring that they have paid back all debts. Hyperinflation happens in countries that were collapsing anyway. Under other circumstances, you could call it "quantitative easing" just like the USA has been doing, or who knows what they will call it, but mark my words, that debt will never be repaid, or if it is, it will be with "new money". If you doubt me, answer this quesrtion - why is anyone still lending to the Japanese Gov't? The answer is of course that it's not real debt. You can't have real debt to an entity that can print the currency the debt is based on. The risk is not that the Gov't cannot repay, the risk is that inflation will reduce the value of the payment, and the 1% interest tells you the assessment of that risk.

by mixmax 13y ago

daliusd 13y ago

You just dropped bunch of facts like they mean something. Task for you: list 5 top countries by assets owned by their citizens with percents. Show those numbers taking into account population size.

mixmax 13y ago
They do mean something, and are in fact worrying. I presume that the HN crowd will understand why, otherwise I'll gladly explain.

venus 13y ago

> Japan is in the gutters and has a debt of 230% of GDP (twice of what Greece has) Greece's debt is to foreigners. In a foreign currency. Big, big, BIG difference. Japan can erase its debt with a stroke of a pen. So could have Greece, actually, but at least someone would have complained. I mean it's ridiculous really. 230% GDP debt - it's a complete joke. Everyone knows it's unpayable, if it had to actually be repaid, which it doesn't. If you are exposed to that, you deserve what you're going to get, which is nothing. But that's OK, because no-one is exposed, because it's basically the Japanese Govt writing a bunch of cheques to itself, and the only effect will be to devalue the yen, if anyone cares, which they don't. Frankly Japan's debt is turning into a sort of glitch in the matrix where something is obviously wrong but no-one mentions it because to do so would be to prove that none of it is real anyway.

mixmax 13y ago
The bulk of Japanese debt is to large Japanese pension funds, so yes theoretically the government could just declare that the Japanese people wouldn't get their pensions and simply steal them, but somehow I don't think that's going to work... Btw. There's an interesting problem with the Japanese debt - if you look at Japanese demographics the population is aging rapidly. This means that the pension funds that hold the debt will have to sell out because the money needs to be paid out. Who will they sell to? Every major institution in Japan is already stuffed to the gills with bonds, so there are two options: print money or sell to foreign investors. Printing money is balancimg on a knifes edge ( which is what the Bank of Japan is currently doing). Currently Japan pays an interest of less than 1%, and yet they spend 25% of their turnover just on interest payments. If you print money inflation and thus interest rises. When they reach 4% they will spend 100% of their income just paying interest on their loans. They can of course print more money and keep depreciating their currency, but history shows us that that doesn't end well. Alternatively they can try to sell bonds to foreigners, but somehow I doubt that there are any takers unless the interest rate goes up. As a comparison Greece pays around 8%. I'm not saying that Japan will definitely go bankrupt, I'm just saying that there are some pretty big red flags, and maneuvering around them is going to be damn hard. Since there are equally hard problems elsewhere in the world economy (as I hinted at above) there's a real chance that something somewhere goes awfully wrong.
- venus 13y ago
  I don't really disagree with you but you're operating on the assumption that the Japanese Gov't will continue playing "the game". Bear in mind there is absolutely nothing stopping them simply declaring that they have paid back all debts. Hyperinflation happens in countries that were collapsing anyway. Under other circumstances, you could call it "quantitative easing" just like the USA has been doing, or who knows what they will call it, but mark my words, that debt will never be repaid, or if it is, it will be with "new money". If you doubt me, answer this quesrtion - why is anyone still lending to the Japanese Gov't? The answer is of course that it's not real debt. You can't have real debt to an entity that can print the currency the debt is based on. The risk is not that the Gov't cannot repay, the risk is that inflation will reduce the value of the payment, and the 1% interest tells you the assessment of that risk.