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Japan Pm Naoto Kan Warns Of 'collapse' Under Debt Pile

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Japan PM Naoto Kan warns of 'collapse' under debt pile

Japan is at "risk of collapse" under its huge debt mountain, the country's new prime minister has said.

Naoto Kan, in his first major speech since taking over, said Japan needed a financial restructuring to avert a Greece-style crisis.

"Our country's outstanding public debt is huge... our public finances have become the worst of any developed country," he said.

After years of borrowing, Japan's debt is twice its gross domestic product.

"It is difficult to continue our fiscal policies by heavily relying on the issuance of government bonds," said Mr Kan, Japan's former finance minister.

"Like the confusion in the eurozone triggered by Greece, there is a risk of collapse if we leave the increase of the public debt untouched and then lose the trust of the bond markets," he said.

Tax reform

Mr Kan did not detail the fiscal changes he may impose to revive Japan's economy after years to stagnation.

But in the past he has advocated increasing Japan's sales tax, a move that would be unpopular.

He said: "It is unavoidable to launch a full reform of the tax system. If we maintain the current level of issuance of new bonds, outstanding debt will surpass 200% of GDP in a few years.

"It's been 20 years since the collapse of the bubble economy in the early 1990s. Because the Japanese economy had been in the doldrums, people have lost the trust they had and fear the uncertainty of the future," he said.

Is Japan the new Greece?

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Japan next, then UK, then US. Once all currencies are run into the ground, then the Bilderberger plan of a single world currency (with the promise that it will bring stability) will be pushed as the only solution to all this mess.

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Japan can only fix it problems when it tackles the legacy of the crash 20 years ago.

I'm afraid the Zombie banks need killing off for good and the losses admitted.

However they now have the added problem of huge govt debt with the export market collapsing.

Other than default what other options have they got?

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They just need to devalue the Yen by 30%.

Then US foreign reserves match Yen debt and they're back below 100% debt:GDP.

The UK ISN'T going over 100% debt:GDP, no matter what. Get used to it.

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Japan next, then UK, then US. Once all currencies are run into the ground, then the Bilderberger plan of a single world currency (with the promise that it will bring stability) will be pushed as the only solution to all this mess.

Japan is not next, it's a good few dominos away.

Sales tax of 3% was introduced in around 1988 and was increased to a spine chilling 5% in the 90's. Income tax is far lower than here etc. They're far behind on the laughing curve.

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Well Yukio Hatoyama didn't last long. He tried to get some spending going, but the budget hawks took back over.

Didn't Hatoyama leave over the Okinawa bases issue?

Anyway, Kan is the better man IMO.

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Is Japan the new Greece?

I still don't get it, how can Japan be doing so badly when they have this very long list of manufacturing giants:

Toyota

Lexus

Hino

Daihatsu

Honda

Acura

Nissan

Infiniti

Suzuki

Mazda

Mitsubishi

Subaru

Isuzu

Canon.

Citizen

Fujitsu

Hitachi

Keyence

Mitsubishi Electric

NEC

Nikon

Nintendo

Panasonic

Sharp

Sega

Seiko

Sony

Toshiba

Yamaha

What the hell? :blink:

If there's no hope for a country with such huge amounts of exports what chances are there for the rest of the world to ever recover?

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I still don't get it, how can Japan be doing so badly when they have this very long list of manufacturing giants:

Maybe those companies are doing well since they aren't paying much tax. The government then has to borrow excessively elsewhere instead. I expect the taxpayer in Japan has effectivly been subsidising their companies (especially banks).

If there's no hope for a country with such huge amounts of exports what chances are there for the rest of the world to ever recover?

We've only bailed out our banks once.

VMR.

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I read somewhere that the issue with Japan is that the savings of Japanese citizens, ie. the reserve of cash that tended to buy most government debt over the lost decade, are now running out.

I suppose, in light of this, you could argue that Japan never really tackled the fundamental fiscal problems created by their crash; instead, they just slowly re-subsumed the proceeds of the 80s boom back into the system over a twenty year period.

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I still don't get it, how can Japan be doing so badly when they have this very long list of manufacturing giants:

<big list>

What the hell? :blink:

If there's no hope for a country with such huge amounts of exports what chances are there for the rest of the world to ever recover?

Part of the problem for Japan is revealed when you look a bit more closely at some of these products.

They tend to say Made in China, Made in Vietnam, Made in the Philippines, Made in Singapore etc when you turn them over. Made in Japan appears far less frequently than you would expect.

Japan priced itself out of global competitiveness once their property price bubble started to grow. The only way that Japanese companies could survive was to export some / most / all of their capital to markets where housing costs did not require labour to earn incomes that made their products globally uncompetitive in price.

The designed in X and made in Y model seems to be pretty universal now. X is countries with high housing costs and Y is countries with low housing costs.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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