Japan's Finances "Approach Edge of Cliff"

[BoyRacer]

Japan’s Finances “Approach Edge of Cliff”, Prime Minister Calls For Sales Tax Hike -> globaleconomicanalysis.blogspot. … cliff.html

The Keynesian cure for deflation is government spending. The Monetarist cure for deflation is quantitative easing. Japan tried both and the only visible result is government debt to the tune of 200% of GDP.
As Japan’s aging work force heads into retirement, retirees need to draw down on their accumulated savings but they can’t. Government buffoons fighting deflation spent it all and 100% more. So now, Japan stands at the edge of a cliff and needs to tax those retirees enough to pay their retirement pensions. Those pensions were squandered building bridges to nowhere, allegedly to end deflation.
Now the plan is to raise taxes enough to pay the retirees. Is that really supposed to work? For how long?

there is more

[BoyRacer]

Japan downgrade: The beginning of the end? -> finance.fortune.cnn.com/2011/01/ … f-the-end/

What a downgrade of Japanese debt by S&P could mean for the country’s future and for the rest of the world.
Japanese debt downgrade

The timing of the downgrade of Japan’s sovereign bonds by Standard & Poor’s on Thursday came as a bit of a surprise to some. After all, Japanese government bond yields have been relatively stable recently, the yen fairly strong, and, as Citigroup points out, the government has vowed to address its sky-high debt load this year.

But S&P isn’t convinced that’s going to happen. “The downgrade reflects our appraisal that Japan’s government debt ratios–already among the highest for rated sovereigns–will continue to rise further than we envisaged before the global economic recession hit the country and will peak only in the mid-2020s.”

there is more

[podge]

imf.org/external/pubs/ft/sur … 62409a.htm

However household finances are in good shape and not highly leveraged.
Household deposits provide a steady demand for Yen sovereign bonds.

Look at chart leverage 4: Household Financial Liabilities as a percentage of Household Financial Deposits.
circa 50% in Japan, 100% in euro area, 200% in US.

Hmmm… I hope somebody keeps buying from the Fed

[bokonon]

Interesting conspiracy theory…

The Myth of Japan’s ‘Lost Decades’
…
If we believe the evidence of our eyes, we necessarily must look again at those economic growth figures. Preposterous though it may seem to an unacclimatized Western observer, it appears that Japanese officials have been deliberately understating the nation’s growth. But why would they do such a thing?
…
theatlantic.com/internationa … des/71741/

[grumpy]

Interesting conspiracy theory…

The Myth of Japan’s ‘Lost Decades’
…
If we believe the evidence of our eyes, we necessarily must look again at those economic growth figures. Preposterous though it may seem to an unacclimatized Western observer, it appears that Japanese officials have been deliberately understating the nation’s growth. But why would they do such a thing?
…
theatlantic.com/internationa … des/71741/

Most important point in that article

True, not all of Japan’s indicators are equally impressive. The Tokyo stock market, for instance, has never recovered from its 1990s slump. Neither has the real estate market. (In the latter case, however, there is a silver lining in a major boost to living standards, in that young home buyers now get far more space for their money. In any case the implosion since 1991 has merely restored some sanity to valuations that had previously become – very temporarily – outlandish).

Why is it such an alien concept that low property prices are good?