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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: steve kammerer who wrote (25604)	1/31/2005 2:36:27 PM
From: mishedlo	Respond to of 110194

"4. They have a completely out of control fiscal deficit, and government debt load (approaching 200% of GDP). The JGB is the most manipulated Bubble on the planet.' Last I heard it was 350% of GDP. Do not remember the source. Does it matter? Would 800% make a difference to anyone? People still seem to think buying the YEN is a good idea, and I still can not figure it out. If 200-350% total debt did not cause a problem, why does anyone think they are going to care about what they are losing by buying US$? Their economy is more screwed up than ours IMO. We need to get back on a gold standard, but I do not see how we get there until we have some major crash first.

To: steve kammerer who wrote (25604)	1/31/2005 2:49:40 PM
From: seventh_son	Read Replies (2) \| Respond to of 110194

If I could weigh in here, I can say with certainty that the current Japanese government debt is very close to 150%, although it has been growing at about 7% per year for a long time now. The US government debt is somewhere around 70% of GDP (7.6 trillion debt with an economy of around 11 trillion+ GDP). You would get 350% of GDP if you take all US debt, including consumer and financial debt. I've wondered a lot about the situation in Japan. It is really hard to compare to the US since everything is opposite. They have a huge current account surplus, while the US has a huge deficit. Their savings rate is high, the US rate is low. Locals account for almost all bond purchases, whereas the US increasingly is dependent on foreigners (actually largely Japan itself) to finance debt. I would be ready to go short the Yen when there is evidence that the ordinary Japanese who put their money in the postal savings system are ready to pull back, or are no longer capable of providing enough funds to finance the massive government deficits. If Japan has to go to the world market to sell large quantities of bonds, with a credit rating that Moody's set lower than Botswana in Africa ( see newsmax.com , they are in big trouble. A massive debt at close to 0% interest is not a big problem. Raise the interest rates a couple percent and it is a major crisis.