I am not saying that. Wait to see what happens after the repatriation process is finished, so the yen remains strong until then. Following that, we go back to money flowing into the robust and risk-worthy economies.Originally Posted by ;
I am not saying that. Wait to see what happens after the repatriation process is finished, so the yen remains strong until then. Following that, we go back to money flowing into the robust and risk-worthy economies.Originally Posted by ;
Japan Spirals Into Bankruptcy?Originally Posted by ;
Japan is dring helplessly towards a dramatic financial crisis. For 20 years the world's second largest economy has been able to borrow cheaply from a captive bond market, feeding its dependence to Keynesian deficit spending -- and permitting it to push public debt beyond the point of no return. The rocketing cost of insuring against the bankruptcy of the Japanese country is telling us that the model has smashed to the buffers. Credit default swaps (CDS) on Japanese debt have risen from 35 to 63 basis points since early September. Regime-change at Tokyo and the coming of Yukio Hatoyama's rookie Democrats -- increasing $550bn (#333bn) to help fund their blitz on welfare and the new social policy -- have concentrated the minds of investors at long last. Markets are worried that Japan is going to hit a brick wall: the amounts are gargantuan, said Albert Edwards, a Japan-veteran at Société Générale. Yukio Hatoyama (pictured left), the new Japanese prime minister, has many big challenges to tackle... Simon Johnson, former chief economist of the International Monetary Fund (IMF), advised the US Congress last week that the debt path was out of control and increased an actual risk that Japan could end up in a major default. The IMF expects Japan's gross public debt to reach 218 percent of gross domestic product (GDP) this year, 227% next year, and 246% by 2014. It has been manageable so far just since Japanese people have been ready -- or coerced -- to financing for nearly nothing. The yield on 10-year government bonds has been around 1.30percent this year, though they jumped to 1.42percent last week. -- Telegraph
http://thedailybell.com/578/Japan-Sp...ankruptcy.html
Japan isn't the only G7 nation with such problems. The US is in a much bigger mess and don't forget the New Orleans disaster. Anyhow, Japan is a net exporter and US owes Japan almost $1 trillion (Japan was the single biggest buyer of US Treasuries until an year ago).Originally Posted by ;
Http://www.treasury.gov/resource-cen...uments/mfh.txt
Guess what will happen to the USD when this US Treasury deposits are liquidated by the Japanese holders?
Japan isn't a resource rich country and a lot of it needs to be imported to re-build the harms inflicted by this natural disaster. A stronger Yen, that will make the imports cheaper, hence beneficial for the Japanese market in the short-medium term. Obviously, it is going to make their exports dearer also but the likes of Toyota's fall in overseas demand is going to be replaced with stronger domestic demand.
Japan is it When there's a nation which ought to monetize their debt.
They have a deflationist mentality which they will need to stop now.
Remember there's trading relations between United states and Japan, so always look at this. Japan is one of the biggest buyers of US debt. It is possible Japan would sell a few US treasury holdings to pay the reconstructions after the disaster.
The Bank of Japan has also decided to pump 15 trillion yen ($183bn USD) into the markets to improve financial stability in the short term. This should raise the yields on debt that is Japanese . There was A similar policy put in place after the Kobe earthquake in'95 and 3 weeks afterwards USDJPY had lost to take a seat at an all-time reduced. A strengthening of the yen has to be watched for, while we're not suggesting that a similar movement is likely in the coming 3 weeks.
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