What Does Japan’s Implosion Mean For the Rest of Us?
by John Rubino on January 26, 2010
(Japan) intends to further ramp up its borrowing to keep the economy from falling back into deflation. …
It is Japan We Should Be Worrying About, Not America, and A Global Fiasco is Brewing in Japan, by Telegraph’s Ambrose Evans-Pritchard
Debt Issues by economist Paul Kasriel
No Way Out for Japan, by blogger Mike Shedlock
The gist of the argument is that … when its pool of domestic savings runs out (as it will in the coming year) the Japanese government will be forced to borrow from foreign investors, who will doubt its ability to pay and demand a higher interest rate. As billions in short term paper roll over at ever-higher rates, interest costs will rise, requiring even more borrowing, which causes investors to demand even higher rates, and so on, until it dawns on the markets that this is a self-reinforcing cycle. Buyers scatter, rates spike, the economy crashes, game over. …
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