¥1,086,000,000,000,000 (Quadrillion) In Debt And Rising, And WhyThe ¥ Will Soon Be A $: "A Lost Decade... Or Two"
Yesterday the Japanese Finance Ministry made a whopper of an announcement: in the year ending March 2013, total Japanese debt will surpass one quadrillion yen, or ¥1,086,000,000,000,000. This is roughly in line with the Zero Hedge expectations that by this March total Japanese debt would surpass one quadrillion yen. In USD terms, at today's exchange rate, this is precisely $14 trillion. And while smaller than America's $15.4 trillion (net of all post debt ceiling breach auctions), which was $14 trillion about a year ago, the GDP backing this notional amount of debt, which just so happens is greater than the GDP of the entire Euro area, is a modest ¥481 trillion, so by the end of the next fiscal year, Japan will have a Debt to GDP ratio of 225%. And that's not counting all the household and financial debt. So prepare to add quadrillion to the vernacular. At this exponential rate of increase quintillion will appear some time in 2015 and so on. Yet the scariest conclusion is that as Bloomberg economist Joseph Brusuelas points out, America is not only next, it already is Japan. Actually scratch that, America is worse than Japan, which at least generated a real housing bubble in the years just preceding the onset of its multi-decade credit crunch, something not even America could do in comparable terms. More importantly, "the debt-to-GDP ratio of the U.S. recently surpassed 100 percent, and it did so in the four years after the onset of the recession, compared with the six years it took the Japanese debt-to-GDP ratio to do so." The Japanese may be better than America in most things, but when it comes to destroying its economy, the US has no equal. Brusuelas' conclusion: "If below trend growth is the most probable scenario in the U.S., the most likely alternative is that the U.S. economy is headed for a lost decade… or two." So... go all in?
From Bloomberg's Brusuelas:
The Long Malaise: Similarities Between Japan And The US
Slowly and surely, comparisons between the long malaise in Japan and the historically weak expansion in the U.S. are growing more valid.
These similarities primarily relate to the unique problems following the piercing of a debt-financed asset bubble that left many households, banks and firms with liabilities that exceeded assets following the bursting of a residential asset bubble. Unless policy is put in place soon or unless home prices are allowed to adjust to equilibrium clear-ing levels, it is growing more likely that the U.S. economy will continue to underperform in a fashion eerily similar to that of Japan over the past two decades. While differences between the U.S. and Japanese economies are many – the conspicuous consumption practiced by American consumers versus the thriftier Japanese public, for example – the similarities between the two economies are many. The direction of long-term yields and of the housing sector, as well as the increasingly leveraged U.S. balance sheet, look all too similar to Japan following the piercing of that country’s housing and equity market bubbles.
Peak to trough, home prices are down 33 percent. The Japanese housing market did not experience appreciable pricing gains during the first two decades of recovery, not exactly a comforting thought for either home owners or policy makers. A comparison between Japan and the U.S. housing markets in the four years following the bursting of their respective housing bubbles shows the two markets headed down the same listless path.
From the viewpoint of policy makers, the floundering housing market is blocking the process through which accommodative financial conditions stoke economic growth. This is likely why the Fed is considering purchasing mortgage-backed securities. It is also why PresidentObama, in his State of the Union address, expressed the desire to create a refinancing program that would support even the refinancing of mortgages not owned or guaranteed by Fannie Mae and Freddie Mac.
Meanwhile, the debt-to-GDP ratio of the U.S. recently surpassed 100 percent, and it did so in the four years after the onset of the recession, compared with the six years it took the Japanese debt-to-GDP ratio to do so. This makes it difficult for policy makers to push forward fiscal solutions to the housing problem, especially given private investor concern over the sovereign debt crisis in the euro zone.
Since the onset of the recession in the U.S., the economy has grown above the long-term trend of 2.7 percent in only three of 16 quarters, averaging a scant 0.16 percent rate of growth. This is very similar to the 0.5 percent average level of growth in Japan between 1991-2000. If below trend growth is the most probable scenario in the U.S., the most likely alternative is that the U.S. economy is headed for a lost decade… or two. Until a solution is put forward that addresses the shadow inventory of homes and permits prices to adjust, policy makers are just spinning their wheels, engaging in stop-gap measures that will probably prove insufficient to solve the most vexing of problems.
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Companion piece:
http://mises.org/daily/5881/Is-the-United-States-in-a-Liquidity-Trap
Japan is a non-nation, a non-entity. Completely controlled by FED wishes. A client state, through and through.
WIth Fukushima (getting worse every DAY, kids with protruding thyroids, radiation levels off the scale, even Boise Idaho baby death spike linked to Fukushima)....
When the great carry trade is finally folded, Japan will go bust. 60 years, all it took to engineer a society into total decline.
The Yen is not a primary global currency, it is a dollar sub-set.
ori
watershed-day-may-this-pour-through-a-million-pairs-of-eyes/
Don't have any money but I'll be happy to write you a check for that.
Here's a little something you'll appreciate:
http://www.youtube.com/watch?v=7GSXbgfKFWg&feature=player_embedded
Enjoy,
John
http://www.youtube.com/johnu78
In my time, they didn`t use to teach us at school about such numbers: trillion, quadrillion, quintillion, etc. Soon we will run out of zeroes.
http://journey-to-alpha.blogspot.com/2012/01/bernanke-expands-zirp-till-mid-2014.html
debt that will never be paid back....classic Ponzi.....new debt paying off old debt
So, when the value of a zero rises above 0.0, you won't be able to find any at any price! :>D
:-) If you are serious GetZee, it's the thought that counts. The money will come as it is meant to. Run after it, it just runs faster. Or so I've learned anyways.
ori
Correct. I am surprised at how many people don't seem to understand this. Their money supply is just another bucket for our money supply.
Reparations for WWII. I could make a similar argument for Europe as well through the BWIs and even the EU to some extent. I can't imagine the opinions of the Okinawans is any different to many here in Europe about their perceived occupiers.
ORI,
Do you have any insights into the Russian central banking system?
Nope Tired1. Why do you ask?
ori
I'm trying to understand where the WS/City CB influence ends or is diminished. Under Yeltsin it seemed that Rothchild had Russian entities under control, but with Khordokovsky in prison and Berezovsky and others in exile Putin seems to have been able to wrest away some money powers.
It seems that Russia is increasingly a target by NATO, the West having been able to bribe enough leaders to ring the western Russian borders with bases.
With the weakening of the USDEUR the money power shift (I think) is moving to RUS/CHI/IND. At least if Europe wants to buy petro products from Russia.
I also wonder what great plan Israel has to keep afloat if foreign hosts are unable to keep to supply of resorces stable. A few weeks without gas or water and the Bedouins are going have some old real estate back.
Who cares about NATO bases, shortly they won't be able to afford to heat their houses, drive their cars and tanks, feed the population, they will close hospitals and cut pensions. Every f... item in their households comes from China or some other developing country but they have financials sectors! Will see how long it's going to propel their GDP's
'I'm trying to understand where the WS/City CB influence ends or is diminished. Under Yeltsin it seemed that Rothchild had Russian entities under control, but with Khordokovsky in prison and Berezovsky and others in exile Putin seems to have been able to wrest away some money powers.'
Where it ends is where there is opposition to the CB/MIC/Intelligence agency model. Read some of Michael Hudson's stuff on the IMF involvement after Russia's bankruptcy and you'll get the gist. It seems you are on the right track though. A simple formula is: the less UST's they buy, the closer you are to 'opposition'.
Thanks for the pointer. I was in the middle of some of that (EBRD) in Moscow in '96. Didn't have a clue as to what was happening. I recall one chat at a bar when one US intel guy who claimed that the US had funded the purchas of a mobile missile launcher, to make use of its' comm gear to set up point to point commercial telephony links. The sum wasn't all that much, but the interesting thing is that it was delivered complete - with the missle!
I think that the Japanese are doing a very responsible thing here, by raising awareness of national debt woes. Scorched earth baby.
Try fitting the 000's in quadrillion on a check.
Scientific notation is my friend! 1 Quadrillion = 1.0E+15
Japanese buy their own debt, time to get the US to buy its own debt and not just one man. We're all in this together....
Lately Americans seem to be buying their own municipal debt.
it is ironic since americans buy everything else placed in front of them
Wait for it... parity bitches, the world over. Then gold is revalued. China wants to be the next empire state in the future world of resource scarcity? I say let them fucking hang themselves.
This is a great opportunity for the thorough application of broken window economics. Lets nuke everyone and then rebuild..........jobs created (not just saved) and we're talking shovel ready here folks. This would also be a good time to usher in a new (still U.S. taxpayer backed) currency with which to rule the world..........we could call it the rubble.
Rubble.
Instant Classic. Well Done Sir.
ori
While the World situation is so turbulent I watch in amazement, and thank God everyday to be living in such interesting times. No fear here baby, just excitement for what we are witnessing and living through is a birth.
Like a woman having contractions, one part of World screams in pain, then another. The contractions grow closer together, and any father knows what that means, get off the golf course and hurry to the hospital.
We all await to see what this new birth will bring.Will it bring a revival of the human spirit where the real producers (people who work for a living) finally demand the non-producers (parasite bankers, trial lawyers, welfare riders) to pull there own weight? Or put more simply; No real work, no food.
Or might it bring the opposite. Maybe the non-producers will overwhelm the system and strip the productive of their hard earned wealth? Will farm lands be seized to provide for the State? Will your small trucking company be forced into servitude to carry goods to those that demand it? And if so how long can that last before someone has to produce?
Will the Christians remember that the events leading to the execution of Christ included him throwing money changers from the Temple? Are we about to toss them to street yet again, and what will be their response if we do?
Will the American electorate wake up and realize that voting for substance is more important than voting for style? One can only hope.
Will science save us? Will new energy forms break through to keep the World working and fed, or will the black gold run out forcing us back to a simpler life style? Would that be all bad?
Many sense a huge creative destruction on the horizon, but what? Jubilee? World War? Dark Ages?
Is it possible that what lies ahead, after some pain, could be the birth of a new reality where the scales are actually balanced as they should be? Could we be close to shedding the efforts trying to force utopia, thereby accepting that the World is not, and never will be perfect and fair for all? Trying to force this goes against the laws of nature and only causes wider spread suffering.
If we ever grow up and face that reality, we can move forward and develop an existence where freedom allows the producers to earn and thus willing provide through charity (And by that I mean giving more than 1% of your income or an embarrassing $369) to provide for the truly needy.
Believe it or not, we still have the power to chose our direction.
Remember this: The Republicans are not necessarily right, they are simply less wrong.
@Turd: thanks, saw this. Good stuff.
Dear Turd
Very interested but as a simple minded person I think it makes a theoretical point not quite relevant to the reality. In large part people like myself have not been spending thier savings but have been and are being asked to spend thier future earning of which the value is somewhat uncertain and in fact we are spending our children's future earnings.
Separately I think that our government is making zero interest rate loans which will never be payed back. How much can I afford to borrow and for how long at zero percent (or negative real rates). The problem is that the keynsian analysis relies on an assumption of resposible. government and an intent to repay. We are now in the realm of the wealthy stealing what they can while it still has value and this is supported by both parties.
Run that through your spreadsheet and tell me where that takes us please.
Quadrillion just doesnt roll off the tounge like million, billion and trillions.......This is going to be their downfall .....(sarc)
Simplify:
1.8 x 1015
Need to get away from all those zero's, too easy to make an accounting mistake.
1.08 x 1015
like a 720 trillion yen mistake
Ya like in Goldmember when Dr. Evil demanded a billion, gazillion, million Yen.
Millions of billions.
Whomptillions, bitchez.
Brazillions.
When do we get to (my favorites...) zillions and gazillions?
Bullish!
Japan wins! :)
Land of the Rising Sum
Great one!
So it this Bretton Woods 4 (or whatever) ALL of the world's CBs decide to debase in unison & siphon off the last of the gravy for their respective Oligarchs?
yup. do you remember some guys named o'neal, fuld, greenberg (2x), rubin, mozilla (geez, the lists goes on). all a big game, who gets the chips off the table first? greed is a bitch.
These guys started selling Yen last week with massive amounts: spadacapital.com Apperantly they were not the only ones when looking at the chart.
Can't wait to trade in vigintillions.
And they want to buy an additional ¥46 trillion ($650b) in foreign bonds.
Currency Suicide. How long before this ¥10 quadrillion?
The Nikkei went from 38,000 to 8,500 during that time too. How long before the bond vigilantes hit them?
Are you on CNBC? talking head just said this
No. I don't know what pains me more. Watching CNBS or the liar in chief.
Fukushimas will help made at least a few more decades lost!
I think you meant to say "quadrirrion".
While the economies are in decline, the stock markets move with great volatility and trend lower and sometimes rise too, for example in the US in 2011.
I had some thoughts on this when USA lost its prestigious AAA rating on Aug 5, 2011.
http://dubaibanker.blogspot.com/2011/08/major-shift-in-textbook-economic...
Any comments?
Wait...wait. I want my fair share of abuse too!!!!!!
Japan should just print a quadrillion yen and pay off all of their debts (the vast majority of which are domestic), thereby stimulating the economy and weakening the yen, which would boost exports and stimulate their economy further still.
Remember that story a few years back when a couple of Japanese were arrested at the Italian border with a couple of hundred mil in UST's. Story went nowhere but it sure makes a lot od sense now.
Yup. I remember. It was at the very start of the printing orgy.
That particular event has morphed into a really odd conspiracy story all its own:
http://www.divinecosmos.com/start-here/davids-blog/995-lawsuit-end-tyranny
Then again, there's always the possibility of "stimulating" it right out of existance a la the Weimar Republic.
aaand...cue Windshield!
Wow - when the numbers start getting that big might as well measure it in astronomical units (au)...soon to be light years (ly).
So yeah, the debt is 1.1 light years...makes sense.
Blotto, you best be working in the damn spaceship, what are you doing speaking to us mutants anyway?
http://www.jpost.com/JewishWorld/JewishNews/Article.aspx?id=255105
US deploys 15 000 troops to Kuwait
http://liverpoolstudentmedia.com/2012/01/us-deploys-15000-troops-to-kuwa...
SOPA Now Dead Hail The Rise Of HR 1981http://www.mobileinquirer.com/2012/sopa-now-dead-hail-the-rise-of-hr-1981/
Thousands march in Poland over Acta internet treatyhttp://www.bbc.co.uk/news/world-europe-16735219
Obama on the verge of a deal with the banks
http://www.thenation.com/blog/165806/obama-brink-settlement-big-banks-an...
Freedom of the press 2011 : United States falls 27 places to 47th
http://www.thezimbabwean.co.uk/news/zimbabwe/55818/2011--2012-worldwide-...
Anonymous "endorses" Ron Paul
http://www.youtube.com/watch?v=scKMR-x_l-c
Man Spends 2 Years In Solitary Confinement After DWI Arrest
http://usnews.msnbc.msn.com/_news/2012/01/25/10233835-report-man-spends-...
Obama said he wouldn't bail anyone out agan? You mean he lies?
We also moved a few F-15 to Hawaii....
A debt like this will obviously never get paid. It's just a cancer on future generations. The same generations that are going to pay dearly for the Fukushima disaster and all the hidden medical costs that will be buried by bureaucrats.
Japan doesn't have much of a next generation. Inverted pyramid of population and all that.
Iolmao500:
True. They may have a little immigration problem to work on there too.
Well they gonna have to become a lot less xenophobic for it to work.
Something which, for ANY culture is pratically impossible to do, especially on such short notice.
yep, they dont have enough young people, and the ones they do have they are radiating. I guess they are hoping they get super powers, realistically all they are gonna get is blood born cancers, and tumors. Very sad that they are poisoning their whole nation and are really only concerned with covering up that fact.
All theses problems, will have to get addressed sometime. We can only close our eyes for so long.
Yep, sure looks like the stone cold nuts to me: I'M ALL IN.
Japan, keep increasing the debt. Make Zimbabwe jealous.
Bernanke and the Federal Reserve Banksters have a bet going of how many zeros they can add to the US debt before it causes everyone to dump the dollar.
How fast can a national debt clock spin before smoke starts pouring out??
http://www.economist.com/content/global_debt_clock
Jubilee! Jubilee!
Hmmm...production in excess of 85 mbpd of that sweet stuff (not fucking ALL LIQUIDS) to return to pre-2008 growth levels which would be necessary to pay off JUST the debt incurred prior to 2008. Debt incurred since.....well I'm entirely thankful our friends in the middle east will be increasing production levels to 1 trillion bpd so we can return to our properous ways. To the moon!
Interesting if this is how the global economy has to function. Yesterday The Guardian printed a chart of British Budget Deficits since 1946 suggesting Deficits were the rule rather than the exception. That means just running the economy cannot generate budget surpluses because it is Consumption dependent and Production did not cover Demand leading to persistent Trade Gaps. The flip side being Japan and Germany and Taiwan etc running persistent Trade Surpluses recycled to fund Budget Deficits in say Britain or USA.
It is starting to look less like balanced growth and more like global strip-mining with Western economies no longer producing but simply consuming and giving China the need to source raw materials globally. Just how these Western nations expect to obtain raw materials is unclear. It is starting to look like force-feeding to produce foie gras before the slaughter
'It is starting to look less like balanced growth and more like global strip-mining with Western economies no longer producing but simply consuming and giving China the need to source raw materials globally.'
Indentured servitude hitting its limits. Remember that Putin comment about the West living as 'parasites'?
Sandman:
This IS how the global economy functions: Debt and deficits are the life-blood of the central bankers and "printing" feeds the beast. Were this scenario backed by gold, we'd be fine. But it ain't.
so the S will never HTF? we will just muddle around aimlessly like the Japs?
Are 40 million Japanese on food stamps? Are they as lazy as the average American? Are they accustomed to the standard of living Americans enjoy? That's a big fat no, no, and no of course. The Japanese do not turn into a horde of zombies when things get tough. Our welfare state however is very different. People here kill each other over blue light specials. Imagine what they'll do when their utilities or EBT cards get turned off?
A lot of debt for a tiny land mass. I wonder what's the debt per square foot in Japan vs debt per square foot in USA.
well to give you an idea of debt to square footage, for starters 1 stack of 100 dollar bills at 1,000,000,000,000 would go roughly 67 miles into the sky so that would give you a starting reference point. These ammounts can only exsist in keystrokes my friend.
Kyle Bass is right again
I take from this story the powers that be can keep this game going for a long long time. Most likely longer then I will be alive. We all will be here when the USA is in that range. The games will go on and we will still be bending over getting it from behind.
Chief I hope when it does collapse we will learn this time and come out better. As I look throughout history we never have though!
Anybody got scoop in Tres Knippa? And this?
http://shortjapandebt.com/
Need to overly the stock markets over that first chart. My hunch is it will show Japans dropping 80% while ours is 'unch'....for now.
Good point. No matter how depressing this "best horse in the glue factory" gets, we do need comparisons of value.
Gawdhelpus.
What's really bizarre is that Japan can no longer fund itself. Savings are now negative, as the older population (the ones who rebuilt Japan after WWII)---in a ZIRP world for far too long---has to draw down principal. Total corporate profits cannot cover the funding needs, so Japan now needs foreign investors to fund its deficits. Though the 10-year JGB yields less than even the US 10-year (about half), cafe society bond vigilantes think loading up on JGBs is some sort of diversification. Apparently the kicker is a coupon for Yakitori and an Asahi draft.
Domo arigato gozaimashita. Gaijin tan sai bo da ne.
Good to see you Chindit.
Didn't know you speak Eskimo;)
japan's sustenance was paid for by growth elsewhere that has stopped.
Who cares about comparisons? Ok, it is interesting that Bernanke decided to follow Japan down the road it travelled like a lost dog in the woods, but most importantly, the fact that all of the world's economies are on par in terms of economic devastation is mindblowing. Especially considering that so many people think there is a recovery of sorts. Stocks are up, after all!
If there was ever a better situation for the term wallow in the mire, I would like to know, because I think that the current state of affairs is just that, with a touch of hell. Mired in corruption, deceit, lies, and bankrupt to the bone, the world is still somehow enjoying itself. Movie goers still flock to the big screen, TV watchers still find new shows to gossip about; the world turns, turns, turns.
Yet 1 out of 5 people that need a job are without one. Grown children live at the home of their parents, with their wives and children. The parents had to have Grandma take out a reverse mortgage to pay their bills. Grandma wonders why her family is suddenly so nice and willing to spend time, as she forks out hundreds of dollars from her deceased husbands pension each month. Humans hustle themselves with smiles, as the world turns, and as the elite class continue pillaging the system they created long ago.
This system, this Fiat Ponz, was created for this purpose, and those who are stomping it under foot do so with the understanding that this is the last gasp of air for it. This is why it is done so blood thirsty. Every penny must be extracted, for there will be no next time after it comes apart. In one, two, five years, how ever long this shitshow lasts, all of the wealth will be extracted from the system. The Blue Team will try to get the government to keep it, because Big Brother knows best, and have the government hold the pensions of its debt slaves. The Red Team will try and disband the government, and allow the people they view as worker-slaves to keep whatever their dollars are worth, which will be close to nothing. Either way, the debt-slaves will lose, and the oligarchs will win.
There is of course still hope. Too bad hope has no action and no meaning. I can hope people take their freedoms back, but that is useless; a waste of my time. I will sit and watch while the people are raped over and over, because I realise they like it and it is not rape. More than anything, it is porn. Those who know what money is, and what will come to pass, will watch as people continue to not only give up their freedoms, but celebrate in doing so. They love getting slapped in the face and turned around, and they want it to continue.
So that is what will get, because that is the chosen destiny. People will ask to have their freedom taken from them, and the elite will come in the night like vampires and suck their blood from them. The world will soon be lived as nightcrawlers, people who gave up their freedoms because of a sadistic mindset.
Mr. L in the world you describe it sounds like food is still available (i might be wrong), take food out of the equation and the matrix changes, the extraction of wealth is to be used to garrison the wealthy....city states.
This is the current world I describe. That's how bad the soul of the average person has become. This is today.
We are currently imitating the oligarchy. We see the CEOs of the Football clubs as who we want to be, so we gorge ourselves, smoke cigars, and drink heavily to become them. Housewives act like Kimmy K to become her. Young men act like Kobe and Tiger to become them.
We don't think once about anything but ourselves. We do not connect our soul to what is beneficial to who we could be, we just want what is shown to us.
I understand what you mean, take away the food and people will change, and that is why that will be the last thing to happen; it is likely that it will be an internet takedown or a live virus that takes down the system (hence the new avatar)- they want to scare the shit out of everyone one last time. It is also possible it will be a false flag and war. But once again, they want every last penny, every last drop of blood before they do so. They will keep the populace fat until day zero, and then they will be thrown in the oven. But my point is society has already broken down.
Look at the "educated" people! They support Obama? Fucking Obama!? And the Red Team, they would accept a dead fish for POTUS as long as it wasn't Obama (but not Paul, heaven forbid!). People are so dumb and complacent, right?
But my point is, THIS IS WHAT PEOPLE WANT. This is what people have chosen. Somewhere along the way, humankind told itself it wanted the whipping post. It got the whipping post. Now it will die on the whipping post.
I'm turning Japanese.
I think I'm turning Japanese.
I really think so.
http://www.youtube.com/watch?v=gEmJ-VWPDM4