Everybody looks at Greece… but could Japan default in 2011? Its governmental debt sits at 227% of GDP and rises rapidly. 59% of tax revenues fund interest ONLY on the debt. And its economy shrunk last year, and expects only 2% total growth in the next 5 years. And their new Democratic (socialist) government has gone on a spending frenzy. It is unsustainable.
"The debt situation is irrecoverable," says Carl Weinberg of High Frequency Economics, referring to Japan. "I don’t see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this."
So the race is on… will Greece, California, New York or Japan fail first?
This pains me, as my company has managed to grow sales in Japan in recent years. Now I’ll have to plan as if 10% of our revenue could be in jeopardy next year.
April 25th, 2010 at 7:37 am
Before you rely on Japan’s collapse, study its basic financial situation and its willingness to pay a price for what it wants. Look at savings rates, interest rates, and foreign debt. Americans can learn something from studying the Japanese.
April 25th, 2010 at 6:07 pm
I’m not “relying on it”. The article covered both sides of it. Yes, Japan is hierarchical and homogeneous. Yes, they can take more group pain than we can. But math is math.
I, for instance, do not see why I should suffer so Democrats can buy votes.