Japan going belly up?

[wincrasher]

Interesting discussion on Squawk Box this morning.

Guy was pointing out that Japan could be in danger of defaulting on it's debt with no ability to sell more. 94% of their debt is held by their own people - mostly thru pension funds. With an aging population and no population growth, their pension funds have told their government that they will be redeeming their bonds from here on out, not buying new ones. The guy said that their effective interest expense was 1.4%, so any big increase, extrapolated out, would quickly rise to more than their entire government budget. Also with the big deficits they're currently running, funding the government in the short term is a real issue. He sees no way out for them.

He also pointed out that the US was on the same, but a much slower path. 56% of US debt is held by foreigners. But eventually, we could get to the same point unless we take action. Of course we will?

[sweeps]

Sounds like an interesting thought exercise but I don't see it happening.

[Broken Arrow]

Sweeps! Where've you been?

I don't know what to make of this, but if the general public fully grasped what's going on with our national deficit and shrinking SS coffers, I would think there'd be riots in the streets.

Maybe both nations share the basic fundamental problem where current economic plans are no longer sustainable. I'm not sure what the answer is yet though.

[sweeps]

BA! Long time. Been spending too much time on Facebook I guess. And this annoying thing called Work.

[Broken Arrow]

Sure, sure, blame it on work to downplay your Facebook Farmville addiction. How's the missus and the kids doing?

[sweeps]

Yeah that &^%$ Farmville. Family's doing fine -- how are things with you?

[Broken Arrow]

Ex still crazy, kids are getting bigger, still looking for two pennies to rub together. The same old.

[Beppington]

Sweeps! Where've you been?

I don't know what to make of this, but if the general public fully grasped what's going on with our national deficit and shrinking SS coffers, I would think there'd be riots in the streets.

Maybe both nations share the basic fundamental problem where current economic plans are no longer sustainable. I'm not sure what the answer is yet though.

I agree: If the masses knew all the facts & fully understood the situation, people would freak out, & confidence (the basis of all economies) would be shot. Of course, that's probably been the case since around 1776 or so.

[Scanner]

I agree: If the masses knew all the facts & fully understood the situation, people would freak out, & confidence (the basis of all economies) would be shot. Of course, that's probably been the case since around 1776 or so.

True. . .this country has had monetary crisises (printing funny money) and banking crisises in our history.

What we are experiencing is really nothing new other than an IMF kind of monitoring matters now. In years past, if the US wanted to print funny money, no one else in the world cared - that was our business.

[sweeps]

Many things in society work only because most people do not know and understand them.

[Mike75]

Its mindblowing

Its funny to see how a small imbalance in society can create problems on so many levels. Japan's social tradition of not having many children is actually affecting their economy? Who would've thought?

[Broken Arrow]

I agree: If the masses knew all the facts & fully understood the situation, people would freak out, & confidence (the basis of all economies) would be shot. Of course, that's probably been the case since around 1776 or so.

Yes, I've even debated that point myself not too long ago here, when people were worried about the state of our economy.

To me, the best time to worry about something isn't when it's already upon us. It's before it strikes. The SS coffer is a simple number, but it's very real, and it carries great social and economic consequences.

I too am confident that our country will survive this as it has survived many other challenges in the past, but that doesn't mean that we are ready for it with adequate preparations in place.

Survival is relative, and how bloody that end result depends on our ability to recognize and adapt as a nation.

Its funny to see how a small imbalance in society can create problems on so many levels. Japan's social tradition of not having many children is actually affecting their economy? Who would've thought?

Yeah, I understand....

However, the economic consequences of over-population is also a very real problem, and in my opinion, is a much bigger issue than a steady population. This also assumes that most of the population will be able to turn into productive, tax-paying citizens. In war-torn countries, this is not turning out to be the case.

I do believe that a modern civilization with steady population like Japan is an easier "dilemma" than one that faces an explosive population. The program in which Japan is currently using to fund their aging population simply needs to change (and for our sake, so do we).

[Slandgie]

SS? What's that?! Oh yeah, that 6.2% they take out of my paycheck that I will never see a dime of!

[wincrasher]

As long as old people are big voters, there will always be SS. Their numbers are getting bigger all the time.

Unfortunately, the easy fix to all our problems is a major increase in population. Republicans keep floating the idea of massive immigration - help increase the tax base and cheap labor minimizes the power of unions. Personally, I'd rather pay higher taxes or get fewer benefits than flood the country with 3rd world immigrants.