Japan's Economy Nearing Collapse

[Mimi]

Japan PM Naoto Kan warns of 'collapse' under debt pile

Page last updated at 13:36 GMT, Friday, 11 June 2010 14:36 UK

 

Naoto Kan New premier Naoto Kan warned that Japan must change or face "collapse"

Japan is at "risk of collapse" under its huge debt mountain, the country's new prime minister has said.

Naoto Kan, in his first major speech since taking over, said Japan needed a financial restructuring to avert a Greece-style crisis.

"Our country's outstanding public debt is huge... our public finances have become the worst of any developed country," he said.

"It is difficult to continue our fiscal policies by heavily relying on the issuance of government bonds," said Mr Kan, Japan's former finance minister.

"Like the confusion in the eurozone triggered by Greece, there is a risk of collapse if we leave the increase of the public debt untouched and then lose the trust of the bond markets," he said.

BBC Online

[Richard Myers]

Do you think that the leaders of the world are trying hard to place things on a stable footing? But, cannot because God does not figure into their plans? We have seen this prophecy. If this is the case, then Jesus is coming sooner than many suspect.

[Drew]

A very interesting 12 minute video on Japan and how its economy relates to the US - http://www.youtube.com/watch?v=udT3dbbryEU&feature=player_embedded

If Japan is facing potential collapse - what about America?

Japan's current GDP to debt ratio is 203%, whereas the US is currently at 91.5%.  So why do some believe that the US will see hyperinflation, where there has been only minimal inflation in Japan over the past several decades.

Japan's economy hit its peak consumer spending in 1990, and entered its lost decade from a position of strength with:

• A balanced budget
• High saving rate of 15%
• Low unemployment rate of 2%
• Net debt to GDP ratio of less than 20%

When Japan hit on hard times it after its bubble grew in the 1980s and peaked in late 1989, it suffered a significant economic downturn.  But Japan had a lot more going for it than the US currently.

1.  Japan's debt consisted of 95% and is held domestically in the country.  Foreign countries and corporations own around $10 trillion dollars of US debt.

2.  Japan's historical average savings rate has been more than four times that of the US.  Now do to people retiring, and other factors, the saving rate in Japan is almost the same as that of the US.

3.  During the fiscal year 2009, Japan had a trade surplus of $56.2 billion, whereas the US had a trade deficit of $374.9 billion.