(please click to enlarge images)
Pictures are worth a lot more than words! The Telegraph in the U.K reports today that credit default swaps (CDS) on five-year Japanese debt have risen from 35 to 63 basis points since early September. This is a very bad sign. See our article on Japan, the Land of the Setting Sun, last Friday October 30, for other points.
Simon Johnson, former chief economist of the International Monetary Fund (IMF), said last week that the debt was out of control and that there is a real risk that Japan could end up in a major default. Russia has defaulted twice not long ago, can Japan follow? The consequendes would be catastrophic.
The IMF expects Japan's gross public debt to reach 218% of GDP this year, 227% next year, and 246% by 2014. The savings rate has dropped from 15% in 1990 to near 2% today, even less than the U.S. Tokyo's price index fell 2.4% in October, the highest deflation in modern era.
Even worse is that there are similarities with China today.
"Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return".
"The pillars of the government debt market are crumbling. Little wonder that the Ministry of Finance has begun advertising bonds in Tokyo taxis, featuring Koyuki from The Last Samurai. If Japan's bond rates rise to global levels of 3% to 4%, interest costs will shatter state finances. "
"Japan's terrible errors are by now well known. It failed to jettison its mercantilist export model in time. It resisted the feminist revolution, leading to a baby strike by young women. It acquiesced in a mad investment bubble (like China now) in the 1980s, stealing growth from the future. It wasted its immense fiscal firepower, scattering money for 20 years on half-baked spending projects to keep the economy afloat. QE was too little, too late, and this is the lesson for the West. We must cut borrowing drastically over the next decade, and offset this with ultra-easy monetary policy. Does Downing Street understand this? Does the White House? Does the European Central Bank? Clearly not".
Tuesday, November 3, 2009
Will Japan Default?
Subscribe to:
Post Comments (Atom)
Blog Archive
-
▼
2009
(843)
-
▼
November
(130)
- 30 Global Financial Institutions To Have Living Wi...
- Max Keiser: Phase II of the Economic Crisis Is Jus...
- S&P500 Report For Week of November 30: Top 25 Over...
- Top Overbought and Oversold ETFs For Short-Term an...
- Straddles For the Dubai Crash: Profit Either Way W...
- The Impact of Dubai Default Has Much More Widespre...
- Dubai: Will They Sink?
- H1N1: D225G Mutation And The Resistance to Tamiflu
- Marc Faber: Economy Will Go Bust, Commodities To R...
- Brazilian Broker Launches Rio2016 Fund: Companies ...
- The Plundering of Ontario
- Monthly Buy And Sell Alerts For Today (Long Term S...
- 23% Of Homeowners Have Underwater Mortgages
- Brazil Almost Bought Citibank During Crisis
- New Record Foreign Investments Into Brazilian Stoc...
- DBV, An ETF For the New Carry-Trade: Analysis
- Top Gold, Silver and Precious Miners ETFs To Buy a...
- Ciena's CEO Explains the Nortel Acquisition
- Best Dividend ETFs To Buy And To Sell In The U.S. ...
- Due to "High Cost of Borrowing" RBC Is Raising Int...
- Gold Versus Dow Ratio: Very Different Pictures Sho...
- Gold Demand Much Weaker Than Expected in Q3: High ...
- Ciena Strikes Gold, Gold Shines, Straddles Update
- S&P500: 34 Oversold and 30 Overbought Companies, T...
- Deflation In The U.S: The U.S Follows the Japanese...
- Personal Bankruptcies Soar 47.4%
- Natural Gas: Where We Are
- How to Profit From the US Dollar, Gold, or Oil Goi...
- Nortel Auction: New Ciena Straddles For December
- Monthly Buy and Sell Signals For Today
- Goldman Sachs Fools Jim Cramer, Who Then Recommend...
- Goldman Sachs Report Gave Dell a 'Buy' on Monday. ...
- Actively Managed ETF: Terrible Performance Versus ...
- New Seasonality ETF Launched
- Seasonality: The Euro Usually Rises In December Ve...
- Possible Gold Pullbacks Targets: $1,122, to $1,074.
- Insurers Are Struggling: Profit Up Or Down
- Preparing For The Global Economic and Financial Co...
- Buy And Sell Alerts For Today
- Goldman Sachs As The New Google: PR In Overdrive
- Ciena Straddles Update
- Profit From UNG/Natural Gas Going Up or Down
- Currencies: FXE Ready To Break Out: Profit Either Way
- Leveraged ETFs: FAS and FAZ Have Now Lost $3.146B
- Marc Faber: Gold is Cheaper Today Than in 2000
- Oil Demand Is Dropping Significantly
- Chances of a New Economic Depression Are 5%, But S...
- Top 20 Leveraged ETFS To Buy And To Sell
- BixTax Troubles for Holders GLD, USO, UNG and Othe...
- Will Ciena Win or Lose the Nortel Auction? Profit ...
- Ports See Higher Shipping Traffic, The Chinese are...
- GLD Straddles Results: ROI of +162%
- Clown Pays $35M To Fly Into Space, But Makes Trip ...
- SPWRA, SunPower Woes: Profit With Straddles
- H1N1 Current Flu Activity In The World
- Top 25 Most Overbought and Oversold ETFs In The U.S.
- Meredith Whitney: There is Nowhere To Hide, Reside...
- H1N1 No Worse Than Regular Flu: Cash In Those H1N1...
- VISA Offers a Fabulous Rate Of ... 19.5%
- The Australian Carry-Trade: 3.25% Rate Advertised,...
- It Is Official: Profits In 2004/2005 Were Just Fun...
- Profit From Natural Gas Going Up or Down
- Gold and Silver Going Up Or Down? Straddles For Th...
- GM Loses $1.1B: Repaying Loans With... Loans
- Mortgage Resets: 2nd Wave Just Starting
- Top Latin American Companies in 2009, Plus Analysi...
- Top 20 Stocks to Buy and Sell Out of the 500 in Th...
- Natural Gas Storage At New Records: Overflow
- Goldman Sachs CEO Claims To Be Doing God's Work: "...
- Top 5 Most Profitable Airlines in the Americas, Th...
- Brazilian Real, Potential Devaluation Speculation ...
- Home Foreclosures Over 300,000 Last Month, For 8th...
- Gold Will Be Permanently Over $1,000, Says Marc Fa...
- Brand New Gold ETF For Junior Miners
- Gold Is Soaring, Target $1,300 and How to Set Stops
- The Biggest Oil Scam Ever: $2.5T, You And I Are Pa...
- Ambak Is Now a Penny Stock: Analysts Recommendatio...
- Top 5 Reasons Why The US Dollar Will Continue To Drop
- Interview With David Rosenberg: Market is Pricing ...
- IEA Whistleblower: Oil Figures Distorted To Avoid ...
- Investing in Gold: What is Best, GLD or Miners?
- Warning on the Brazilian Currency (Real)
- Straddles Results on FSLR, VALE, GLD, AUY, KGC
- Profit From Gold or Silver Going Up Or Down: Yaman...
- China's Investments in African Commodities Soar
- Options Guru Phil Davis on BNN
- Greenspan Says U.S Is Feeling Maximum Impact From ...
- The Great Canadian Housing Bubble of 2009
- Jim Rogers Says Roubini Did Not Do His Homework, A...
- Snapshot of Current Global Economic Growth Momentum
- USD is the Source of Carry Trades, And Why the IMF...
- Natural Gas and Oil: Trucking Hurricanes (Ida)
- The Top Gold And Precious Metals ETFs In The U.S.
- Mortgage Resets: We Are in The Eye of The Storm; W...
- Top H1N1 Drug Companies Performance: Effective Mar...
- Top Oversold and Overbought Companies in The S&P500
- Potash in the Amazon: Drilling Commences, 3rd Larg...
- Crude Oil In Strong Trend (Video)
- PBR, Petrobras Finds 5Tcf Natural Gas Reserve and ...
- Top ETFs To Sell Out of All 770 ETFs For The Short...
-
▼
November
(130)
No comments:
Post a Comment