Posts Tagged Government debt

Okubo Says Energy-Saving Efforts Limited Japan Output – YouTube

Scary Mausoleum (Well it's a chapel really)

Scary - by ZekiZeki on Flickr

Okubo Says Energy-Saving Efforts Limited Japan Output – YouTube.

“But this is a kind of scary situation, isn’t it? You’re talking about the country with the biggest public debt in the world about to spend a bunch more money (12 trillion yen, @ 1:26) rebuilding the country at a time when its producers the likes of another chip maker the other day  leaving the country,  taking production elsewhere to places like Taiwan because the exchange rate they say leaves them no choice.”

 

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In Japan, the same old problems – The Washington Post

So  Japan’s  debt will be 300+% of GDP by 2020, but nothing to worry but because 9%% of the bonds are domestically owned….

The government will also have to borrow even more money, issuing bonds. Over the next five years, Japan will need to marshal some $250 billion for reconstruction. The country is not on the verge of a debt crisis, because some 95 percent of its bonds are domestically owned, but the demands of rebuilding could push Japan increasingly toward the foreign market.According to the calculations of Oguro and Sato, Japan would have had a debt-to-GDP ratio of 301 percent by 2020 had the disaster never occurred. Now, they project a ratio of 309 percent.

“It might be slight,” Sato said, “but the probability of government bankruptcy will increase.”

Macroeconomists who study disasters also acknowledge one variable that research doesn’t account for: government competence. Prime Minister Naoto Kan faces calls to use the disaster as a catalyst for long-delayed reforms, such as raising taxes, liberalizing trade, deregulating the energy sector and modernizing the archaic farming and fishing industries. But all of these steps face pockets of vocal opposition from politically powerful interest groups, and a brief period of post-disaster political unity has already given way to bickering. With even some in his own party pushing for Kan’s resignation, the prime minister has little political muscle.

And politicians fight over who can appear more generous to voters. Business as usual.

Though Japan’s parliament this month passed a $50 billion special budget, Japan will need several subsequent, and larger, special budgets to fund recovery in the disaster-hit area.

Kan’s government says the second budget could be ready by August.

But opposition parties, citing an urgency to deliver money to the battered region, want it to be ready by next month. Otherwise, they threaten, Kan will face a no-confidence vote. This could give Japan its seventh prime minister in six years.

“Japan is at a turning point,” Sato said. “What we need, ideally, is structural reform alongside reconstruction. But the other scenario is, there is no major reform. Then we will remain in a gloomy decade.”

via In Japan, the same old problems – The Washington Post.

Big words. But whether there is “reform” or not, I predict a gloomy decade if politcians have their way.

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How much is £350bn?

The Bank of England is one of the oldest centr...
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The FT (March 25th, 2009) quotes the head of the Bank of England telling the public that “We are facing very large fiscal deficits over the next two to three years”. How large, Mr King?

According to the Ernst & Young Item club, in the two years 2009-10 and 2010-11, the government will probably have to raise £350bn.

How much money is that? The FT tries to give us an idea:

In the annals of a nation that has prided itself on keeping tabs on government debt since shortly after the Glorious Revolution in 1688, the state has never needed to borrow as much money.

Impressed? Wait, there’s more:

That is more debt bequeathed to its successor than the total borrowed by successive rulers and governments of Britain between 1691 and 1997, the year Labour was elected.

oooookkkaaaaaaayyyy. That’s, erm, a lot.  Somebody working for the Adur Brewery in Sussex has taken the trouble to provide a more striking image: how long would it take, do you think, to burn this much money if you burned 5 million pounds, a stack of bills 1 yard square and 5 feet tall, every day? (Hint: If you guess 100 years, you’re wrong. It’s more!)

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