Just wondering what the impact will be with Japan
- Thread starter keggahz
- Start date
We're all wondering - do a search on Japan as there are a few threads already.
The financial review gave a reason why metals prices decreased (having one of the major economies out of action will cause a contraction of the global economy which means threats and fears of inflation are subsided) .... there is legit arguments for both sides .... so its a bit hard to tell, just gotta wait and see
G
Guest
Guest
Apparently Kobe had zero net effect on our economy and and at the same time wreaked a lot more damage to Japans manufacturing capacity than the current emergency has caused .
I think the sell off is/was a lot more emotive than logical and if anything it will bounce back quickly once people put their thinking hats back on, If anything in the near future it will act as a stimulus for Japan as rebuilding efforts start much like it has for areas here at home and nearby that have been hit with natural disasters.
Japan will also ramp up Tsunami walls and re-engineer strategic infrastructure to withstand higher quake intensities as well which will also add to the impetus .
Maybe a short term pullback but a quick and strong bounce and consolidation as well considering that Japan does not have the same foreign debt issues as many other country's IE most of it is in house.
I think the sell off is/was a lot more emotive than logical and if anything it will bounce back quickly once people put their thinking hats back on, If anything in the near future it will act as a stimulus for Japan as rebuilding efforts start much like it has for areas here at home and nearby that have been hit with natural disasters.
Japan will also ramp up Tsunami walls and re-engineer strategic infrastructure to withstand higher quake intensities as well which will also add to the impetus .
Maybe a short term pullback but a quick and strong bounce and consolidation as well considering that Japan does not have the same foreign debt issues as many other country's IE most of it is in house.
Contrary to mainstream beliefs, I don't think disasters are good for economies in any way. All a disaster causes is forced spending on repairing existing infrastructure, etc... rather than spending on new and productive things (like new infrastructure). While, yes, it does bring forward a lot of the spending, and creates a few jobs, it means that the future projects (which would have created jobs anyway) have to be canceled. Also all of the jobs in devastated areas are pretty much gone... (cant bake bread in a flooded bakery), and resources that could have been used for productive things are instead used for repairs.
Re Japan's public debt, it is the largest by %GDP in the world (200% i beleive). The Japs really dont have that much more borrowing capacity.
Also, if the nuke plant goes critical (apparently one of the reactors is a plutonium one), then theres gonna be a whole of territory and population taken out of action... leading to unforseen economic consequences (The USSR collapsed shortly after Chernobyl... yes, not the sole cause, but the only comparable event available)
Re Japan's public debt, it is the largest by %GDP in the world (200% i beleive). The Japs really dont have that much more borrowing capacity.
Also, if the nuke plant goes critical (apparently one of the reactors is a plutonium one), then theres gonna be a whole of territory and population taken out of action... leading to unforseen economic consequences (The USSR collapsed shortly after Chernobyl... yes, not the sole cause, but the only comparable event available)
hyperinflation said:
Yeah this disaster will boost the economy is bullshit, there will definitely be more spent on construction in the near future but hundreds of millions in capital assets have been wiped away, this is value that is just gone. Basically Japan has just been made poor via disaster.
re nuclear power in japan, it is there to stay but it will change, they're almost certainly going to start moving away from PWR's to more sensible options.
I wouldn't be surprised if these things start popping up everywhere around japan http://en.wikipedia.org/wiki/Toshiba_4S
Yippe-Ki-Ya
New Member
hyperinflation said:
I agree 100% with you. Only Keynsian "economists" believe that disasters are good for an economy.
Oops! They're they're the fools running the country...
It depends on your point of view ... Its the economy, there is someone who gains and someone who looses.
Japan is in dire straits, dont know where they are going to fund this rebuild they have ahead of them, its quite sad to think of it really, however from australia's point of view for example, WHEN japan starts to spend again it will need to start exporting materials which will benefit australia's (and any other commodities countries) economy.
Currently 40% of australia's coal exports come from japan ( could be an increase of exports to japan when they recover, due to crackdown on nuclear power). 18% of Australia's Total exports go to japan, in the short term im sure all this will decrease, BUT in the long term as japan starts to rebuild our economies will benefit. So yeh, there will be problems with japans economy, but if they come up with the money (somehow) it will go to commodities countries ...
The real thing to watch is WHERE japan will get its money from, will it sell gold, will they sell US treasuries ... how they decide to spend i think will be the all important factor that will have some effect on the economy.
Japan is in dire straits, dont know where they are going to fund this rebuild they have ahead of them, its quite sad to think of it really, however from australia's point of view for example, WHEN japan starts to spend again it will need to start exporting materials which will benefit australia's (and any other commodities countries) economy.
Currently 40% of australia's coal exports come from japan ( could be an increase of exports to japan when they recover, due to crackdown on nuclear power). 18% of Australia's Total exports go to japan, in the short term im sure all this will decrease, BUT in the long term as japan starts to rebuild our economies will benefit. So yeh, there will be problems with japans economy, but if they come up with the money (somehow) it will go to commodities countries ...
The real thing to watch is WHERE japan will get its money from, will it sell gold, will they sell US treasuries ... how they decide to spend i think will be the all important factor that will have some effect on the economy.
Blame_Game
New Member
How can Japan have a 200% GDP public debt and hold $800 billion in US treasuries?
Why not sell the US treasuries and re-pay some of their debt? Is it because of the yields they are receiving from the treasuries?
AND how does it work that a country in debt (Japan) can buy another countries debt (USA) with debt. Its like a debt swap is it not?
Why not sell the US treasuries and re-pay some of their debt? Is it because of the yields they are receiving from the treasuries?
AND how does it work that a country in debt (Japan) can buy another countries debt (USA) with debt. Its like a debt swap is it not?
You can still have a mortgage of $500,000 (Total debt), hold PM's as investment (Us Treasuries) are are making 70K a year (your ability to service debt)
ie, you have big debt, you hold investments cause you want higher yield from that portion of your money you can afford to invest and you can service your debt (albiet barely), yes your struggling but you get by. Then your house catches on fire and you have no insurance ... this is the point when your stuffed.
Thats why i wonder where japan will get its new money from, interest rates at zero already (pretty much) , what will they sell, negotiate or do is really where i think it gets interesting .... (Also In the basic example above you may not want to sell your PM's to pay your house cause you are getting a better return for them at the moment ...)
Japan was barely getting by for many years but they did (cause japanese back then saved a boat load of money)
Government was able to sell its debt to its own people to pay back their debt through citizens savings
Then they could buy US treasuries and invest almost 0% cash rate of their own currency in other currencies such as USD (carry trade)
Problem is now that population of savers (older gen) are now retiring and wanna get rid of their bonds and enjoy life
They get hit with tsunami and need money quick,
Japan is in a long term stagnation yet need money, if they sell their bonds on foreign markets at 0.01% interest no one will buy them
If they sell them at a higher rate (to make it attractive to buyers) it will kill domestic economy (imagine rates in aus going from 7% to 21%)
I think right now they are in a really tight predicament (not sure if i read correctly) but i think japan has a large stockpile of gold also , along with US treasuries , they have also pumped over 200 Billion into economy , first 183 billion and an additional 43 billion just today.....
ie, you have big debt, you hold investments cause you want higher yield from that portion of your money you can afford to invest and you can service your debt (albiet barely), yes your struggling but you get by. Then your house catches on fire and you have no insurance ... this is the point when your stuffed.
Thats why i wonder where japan will get its new money from, interest rates at zero already (pretty much) , what will they sell, negotiate or do is really where i think it gets interesting .... (Also In the basic example above you may not want to sell your PM's to pay your house cause you are getting a better return for them at the moment ...)Japan was barely getting by for many years but they did (cause japanese back then saved a boat load of money)
Government was able to sell its debt to its own people to pay back their debt through citizens savings
Then they could buy US treasuries and invest almost 0% cash rate of their own currency in other currencies such as USD (carry trade)
Problem is now that population of savers (older gen) are now retiring and wanna get rid of their bonds and enjoy life
They get hit with tsunami and need money quick,
Japan is in a long term stagnation yet need money, if they sell their bonds on foreign markets at 0.01% interest no one will buy them
If they sell them at a higher rate (to make it attractive to buyers) it will kill domestic economy (imagine rates in aus going from 7% to 21%)
I think right now they are in a really tight predicament (not sure if i read correctly) but i think japan has a large stockpile of gold also , along with US treasuries , they have also pumped over 200 Billion into economy , first 183 billion and an additional 43 billion just today.....
Blame_Game
New Member
Thanks. I just cant believe what a mighty mess the whole system is in.
I think the answer to the predicament you talk of pmstacker is examined in todays article on the Daily Reckoning. As you suggested...........print money.
http://www.dailyreckoning.com.au/why-japan-feels-the-need-to-print-money/2011/03/17/
I think the answer to the predicament you talk of pmstacker is examined in todays article on the Daily Reckoning. As you suggested...........print money.
http://www.dailyreckoning.com.au/why-japan-feels-the-need-to-print-money/2011/03/17/
Blame_Game said:
Oh, ill give it a read, i do feel sorry for the japanese people, it seems like they are really stuffed. At the end of the day though, they will get money (from somewhere) and that money will flood to us and other economies like us and provide a stronger economic growth to our economy, however, what happens to their economy (and how they pay that money back) is anyones guess and in the long term how japans contracting economy effects the rest of the world (as a result of further debt from this crisis) is anyones guess. Many people say it wont be much and i kind of tend to agree but for aus 18% of our total exports go to japan so if that decreases in the long term im sure it will effect us a little also.
Economics is a zero sum game, someone wins but someone HAS to loose...eventually
Just gotta empathise a bit and you can see how stuffed they actually are. (economically and morale)
G
Guest
Guest
pmstacker said:You can still have a mortgage of $500,000 (Total debt), hold PM's as investment (Us Treasuries) are are making 70K a year (your ability to service debt)
ie, you have big debt, you hold investments cause you want higher yield from that portion of your money you can afford to invest and you can service your debt (albiet barely), yes your struggling but you get by. Then your house catches on fire and you have no insurance ... this is the point when your stuffed.
Japan was barely getting by for many years but they did (cause japanese back then saved a boat load of money)
Government was able to sell its debt to its own people to pay back their debt through citizens savings
Then they could buy US treasuries and invest almost 0% cash rate of their own currency in other currencies such as USD (carry trade)
Problem is now that population of savers (older gen) are now retiring and wanna get rid of their bonds and enjoy life
They get hit with tsunami and need money quick,
Japan is in a long term stagnation yet need money, if they sell their bonds on foreign markets at 0.01% interest no one will buy them
If they sell them at a higher rate (to make it attractive to buyers) it will kill domestic economy (imagine rates in aus going from 7% to 21%)
I think right now they are in a really tight predicament (not sure if i read correctly) but i think japan has a large stockpile of gold also , along with US treasuries , they have also pumped over 200 Billion into economy , first 183 billion and an additional 43 billion just today.....
Japan also has massive amounts of capital tied up in foreign assets about $3 trillion which they will now want to withdraw and use to rebuild, which is why we have then Yen strengthening agains the US and AU $ .
Cinvalo
Member
Japan should not have a low interest rate. Interest rate should be high so that that can import resources inexpensively to re-build the infrastructures that had been destroyed during disaster. What Japan should be doing right now, it to use their 800 Billions worth of Treasury holdings to finance their rebuilt in economy and increase the interest rate instead of printing money and further increase the money supply. Money Supply should be contracted together with the economy.
If Natural disaster is any good to our economy, why won't we create more disasters. We can probably do a evacuation to our own citizens and send our air force to bomb cities and rebuilt it later on for the sake of future economy growth.
If Natural disaster is any good to our economy, why won't we create more disasters. We can probably do a evacuation to our own citizens and send our air force to bomb cities and rebuilt it later on for the sake of future economy growth.
Blame_Game
New Member
Cinvalo said:
I see that some oooooone has been listening to Peter Schiff
Blame_Game said:Cinvalo said:
I see that some oooooone has been listening to Peter Schiff
Yeh noticed that, i just watched the video also and i mean, most of what he says is common sense none if it is really rocket science , thats why im more interested in comments that say its better for japan then its not, cause common logic for most of us internet economists says it doesnt make sense and isnt good for the economics, for the people that say it is i really like to hear the reason cause could be something is missing from the common interent economists understanding :/