

When Japan Collapses - Maro
http://seekingalpha.com/article/225460-when-japan-collapses

======
mikhailfranco
Assume all of Greece's debt is external, then the external debts of Greece and
Japan are not too different:

    
    
              External  Debt     GDP   =  Net
      Greece:    100% * 120% * $ 355bn = $426bn
      Japan:       5% * 200% * $4900bn = $490bn
    

If Japan defaults, the main effect will be that the Japanese people will be a
lot poorer. There will also be some external effects on bond holders,
investors in the stock market, and exporters to the Japanese market. I suspect
the stoical Japanese have already written off all the govt debt they hold -
the default won't exactly be a surprise when it happens.

~~~
patio11
_I suspect the stoical Japanese have already written off all the govt debt
they hold_

Oh, you suspect wrongly.

~~~
hga
Especially since---please correct me if what I've read or remember is wrong---
the Postal Agency's Bank, which has most? of the people's savings (that's old
info, could be different now that there are more options) has _way_ too much
exposure to Japanese government debt.

------
MikeMacMan
For anyone interesting in learning more about the scale of river-paving and
publicly-funded construction projects that Japan undertook in the 80s and 90s,
then take a look at Alex Kerr's excellent book, _Dogs and Demons_.

------
delackner
I'd really like to see a breakdown of the structure of Japanese government
debt. Since it is almost entirely owed to the Japanese people, what form is
that in? Bonds? Does the figure include the balance of people's normal postal-
savings accounts? Looking up the figures, the total government debt is roughly
equal to the total national savings, so am I right in reading that the
government has simply burned the entire nation's savings on building roads and
bridges? Banzai! At least they got a spiffy looking country out of the deal.
Zero the books and kick out the bureaucrats, and pray that Nintendo keeps
selling Wiis.

------
InclinedPlane
On the plus side, perhaps Japan's crisis will finally end any shred of belief
in the ridiculous Keynesian notion that a country can spend its way out of a
recession.

~~~
WorkerBee
Well, the UK is currently testing the opposite ridiculous notion - that by
laying off lots of government workers (when there already lots of people
looking for jobs), reducing benefits to everyone (which hits the poor far
harder, of course), and cutting funding to education and research, you'll
somehow help the country recover from a recession faster and better.

~~~
rwmj
Laying off people who weren't and aren't contributing anything productive,
because the country has run up gigantic debts.

There's not any easy answer to this problem (except not to have run up the
debts in the first place).

~~~
arethuza
Public sector spending and working practices had been out of control for years
- it was clear to anyone with any knowledge of how the public sector worked
that it couldn't go on for ever and when it stopped things would be ugly.

There is no doubt that there are a lot of people in the public sector who
deliver a lot of value. However, there are also a lot of organisations and
people who clearly aren't - a tidy out was long overdue.

~~~
bruceboughton
You assume that this tidy out will get rid of more of the latter (the
unproductive ones) than the former (the value-producing ones).

~~~
arethuza
Indeed, a politically astute friend point out that the first reaction of
managers would be to cut productive first line services _first_. The so called
"Washington Monument Syndrome":

<http://en.wikipedia.org/wiki/Washington_Monument_Syndrome>

Of course, managers who act this way should be the first ones kicked out...

------
known
"If it moves, tax it. If it keeps moving, regulate it. And if it stops moving,
subsidize it." --Reagon

------
earl
For the record, the complaint most "ivy league nobel prize economists" have
with Japan's behavior is not the quantity of spending, but the type -- they
didn't force banks to recognize losses, instead allowing them to renegotiate
loans on much more favorable terms, ignore nonperforming loans, etc --
anything to avoid having to bring the losses on books, take the hit, and start
over. This causes a lack of loan availability for more than a decade.

Perhaps next time this, err, nobody ("James Quinn is a senior director of
strategic planning for a major university") feels like trashing world class
economists, he could discuss their actual opinion?

~~~
temphn
"World class economists" disagree a lot more on economics than world class
physicists disagree about inclined planes. For every Krugman there is a
Becker, a Hayek, a Friedman. So argument from authority just plain doesn't
work in this area.

~~~
borism
wow! you really think 2 dead people disagree much with Paul Krugman?

~~~
borism
you can downvote me all you want, comparing Krugman to Hayek and Friedman is
just plain idiotic.

While these two (together, or shall I say in opposition with Keynes) helped
lay an important parts of foundation of modern economics, their ideas are just
about as relevant nowadays as Newton mechanics to building an interstellar
spaceship.

