Japan Plans To Cut Spending, Could Run Out Of Money In A Month

absolutely

sacramento, springfield, athens, brussels, tokyo...

too much trickle down

LOL!

Helix said:

apparently, there was a minor problem with trickle down theory. the problem is that when the lower socioeconomic groups run out of money and credit due to lack of well-paying employment opportunities, the upper groups don't spend money widely enough to sustain an economic ecosystem. they then proceed to eat themselves, and the system progresses towards collapse.

that some are proposing that the solution is more trickle down is somewhat astounding.

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Your describing the worst case scenario. Trickle down (free market) works. Its as simple as that. What i find astounding is those who think re-distribution of wealth is a better solution. That somehow we can sustain it. That the rich will always have money to take and the poor will always be poor.

The high level and long term government stimulus in Japan has been good and bad for Japan, it prevented a collapse of the economy after the asset bubble crash, but it helped prevent the structural changes in the Japanese economy that have been required. Now with Japan having trade deficits rather then surplus's the ability of the government to afford the stimulus spending is has been reduced. Japan of course can go the route of QE, as a means to lower the drastically rising Yen, but it does not change the fact that Japan requires some structural changes in its economy, and it needs it soon

The Public debt there is over 200% of GDP. List of countries by public debt - Wikipedia, the free encyclopedia How in the world could they ever let themselves get that deep into it? The problem with living on debt is that sooner or later, the debt has to be payed back. Servicing that debt is going to take up greater and greater portions of the available money, causing the need for greater debt to maintain the same level of services.

Take a look at their tax rates, there is not very much room to raise it before it just decimates individual income. Higher corporate taxes also chases away business.

Their opposition is right to try to stop the bleeding from debt and not allow more. Yes, austerity measures are going to hurt, but so will total collapse. Yet another country where the government providing social services has driven the budget and debt to unsustainable levels. We really need to wake up in the US and realize that we are headed down the same road. Our debt is over 100% GDP, way, way to high. It is time to make austere cuts to entitlements where we can, otherwise, we are now to the point where our debt will cause us even more debt just to service it.

Cut some now or cut all later, that is our choice and we need to make it. Do we have room to raise taxes, maybe, a overhaul of our tax system is needed, but taxes alone will not make up the difference and we can ill afford to keep piling on debt.

Dpetty said:

Trickle down (free market) works. Its as simple as that.

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i suppose that it depends on your definition of "works."

Helix said:

i suppose that it depends on your definition of "works."

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It would work better if we removed corporate protectionism. We have tried it with protectionism, it didn't work at the level we thought. We have now tried "trickle up" which has not shown any indication of working even a little. Maybe "trickle down" minus protectionism should be tried.

Helix said:

i suppose that it depends on your definition of "works."

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I guess your right.

I guess i should say it works for those willing to work. It doesnt really benefit the lazy and useless. They are the ones who benefit from re-distribution arent they? Re-distribution relies on the work and success of the upper and upper-middle classes. It encourages the lower classes to hate the upper classes because of their success and it penalizes them for being so. It creates dependency to government and it takes away peoples ability to provide for themselves. It opperates on the premis that we cant lift up these people up, so we will instead pull these other people down. You talk about the wealthy making money like its some sort of scandal and you rationalize it by saying that making "some" money is ok, but the rich make way more than they deserve, so obviously they should give the rest to us, even though we have done nothing to earn or deserve it.

So ya, i guess it depends on your definition of "works".

DVSentinel said:

The Public debt there is over 200% of GDP. List of countries by public debt - Wikipedia, the free encyclopedia How in the world could they ever let themselves get that deep into it? The problem with living on debt is that sooner or later, the debt has to be payed back. Servicing that debt is going to take up greater and greater portions of the available money, causing the need for greater debt to maintain the same level of services.

Take a look at their tax rates, there is not very much room to raise it before it just decimates individual income. Higher corporate taxes also chases away business.

Their opposition is right to try to stop the bleeding from debt and not allow more. Yes, austerity measures are going to hurt, but so will total collapse. Yet another country where the government providing social services has driven the budget and debt to unsustainable levels. We really need to wake up in the US and realize that we are headed down the same road. Our debt is over 100% GDP, way, way to high. It is time to make austere cuts to entitlements where we can, otherwise, we are now to the point where our debt will cause us even more debt just to service it.

Cut some now or cut all later, that is our choice and we need to make it. Do we have room to raise taxes, maybe, a overhaul of our tax system is needed, but taxes alone will not make up the difference and we can ill afford to keep piling on debt.

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In Japan's case it is not social services that is the cause, but excessive infrustructure spending on projects that are unneeded and wasteful.

PeteEU said:

Eh show me in post 15 where I say they will default? I in fact state they wont because of several reasons. /shrug.

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You missed my point.

This is beyond boring. I have made my points, you yours.

Let me know when your mind is open to new macroeconomic ideas.

Until then...

...have a nice day.

DA60 said:

You missed my point.

This is beyond boring. I have made my points, you yours.

Let me know when your mind is open to new macroeconomic ideas.

Until then...

...have a nice day.

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My mind is always open to new macro-economic ideas.. problem is that "sovereign debt problem" is not new, it is old and when it is combined with kitchen table economics based on ignorance.. then you have a problem

Person with debt vs GDP of 300+% .. not a problem!
Country with debt vs GDP of 100%... major problem!

Explain to me why the first is not a problem.. but the second is?

PeteEU said:

My mind is always open to new macro-economic ideas.. problem is that "sovereign debt problem" is not new, it is old and when it is combined with kitchen table economics based on ignorance.. then you have a problem

Person with debt vs GDP of 300+% .. not a problem!
Country with debt vs GDP of 100%... major problem!

Explain to me why the first is not a problem.. but the second is?

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No idea what you are talking about, nor do I much care.

You said the fact that Japan's debt is primarily held by Japanese makes it less of a problem then if foreigners hold the debt,
I disagreed and explained why.
You disagree (what a shock).
So what?
You won't change your mind and I won't change mine (on this).

Further discussion is thus pointless.
And boring as well.
You are the one that seems slightly obsessed and refuses to let it go.

Have you nothing better to do?
I know I do.


Have a nice day.

Lord Tammerlain said:

In Japan's case it is not social services that is the cause, but excessive infrustructure spending on projects that are unneeded and wasteful.

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Interesting observation. Seems like exactly the course Obama wants to follow!

Where has all the money gone? whose pockets is it in? Is somebody hiding it in a buried sock? Are the Bildenbergs getting poorer?

Are the poor hoarding it in swiss bank accounts? So many questions and no answers and no you can't audit my piggy bank.

DA60 said:

No idea what you are talking about.

Now please ask me if I have enough respect for your macroeconomic ideas to care? Please.

Have a nice day.

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So you are not one of those kitchen table economic theorists that are so popular these days? Your views certainly show that you at least have sympathies with them.....

Point is.. a person.. you, who owns a home and has a mortgage has far more in debt than he/she has in yearly income. The average for many is 500% debt vs the yearly income. And that is not a problem, despite you can loose your whole income if you loose your job.

Now take a country, who has tax income all the time.. unless the country totally falls apart like Somalia. But here when suddenly the debt ratio hits 70% or 100% or in Japan's case 200%+, then it is a massive problem and the world is falling apart and we must cut everything to the bone and let people die on the streets, because.. we cant afford it any more attitude.

There is no doubt that Japan needs structural reforms to fix their deficit and raise their tax income. There is no doubt that much of the debt is owed to its own people, so over time things like inflation will eat away at that debt, just as it does for everyone else. And there is no doubt that fixing the problems all our countries have, will take time once the politicians admit there is a problem and want to fix it. Problem is in Japan.. the politicians have not reached that point just yet. Same problem in the US and some European countries.

Now once that point has been reached, and the politicians have accepted that things need to change.. and they start doing it.. it will still take many many years to fix. My own country of Denmark was on the verge of bankruptcy in the late 1970s.. it was the Greece of its time. But the politicians accepted they had created a problem and started to fix it. It took over a decade.. hell 30 years to get rid of the external debt we had accumulated up to the late 1970s. Point is.. Denmark got time to deal with their problems, and did not gut government and send people into the poor house. Now days.. countries like Greece, Spain and so on dont get time.. and Japan only has gotten a "free pass" for now, because of its massive private sector wealth, economic and political power... but as always.. it requires that politicians accept they have a problem and stop blaming the opposition.

Dpetty said:

I guess your right.

I guess i should say it works for those willing to work. It doesnt really benefit the lazy and useless. They are the ones who benefit from re-distribution arent they? Re-distribution relies on the work and success of the upper and upper-middle classes. It encourages the lower classes to hate the upper classes because of their success and it penalizes them for being so. It creates dependency to government and it takes away peoples ability to provide for themselves. It opperates on the premis that we cant lift up these people up, so we will instead pull these other people down. You talk about the wealthy making money like its some sort of scandal and you rationalize it by saying that making "some" money is ok, but the rich make way more than they deserve, so obviously they should give the rest to us, even though we have done nothing to earn or deserve it.

So ya, i guess it depends on your definition of "works".

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i'm not promoting soaking the rich to just give money away to people who won't work. we have a lot of nation building to do right here at home, and we should reallocate tax dollars and let the marginal rates go back to 1990s levels so that we can do that. the middle and lower socioeconomic classes spend what they make because they have to. this spreads the money out locally, and more efficiently than concentrating most of it in one place. it adds liquidity, and sustains a wider economic ecosystem. and people can still get quite wealthy; in fact, more will have a chance. the problem is that, whether by design, inadvertently, or both, rungs have been removed from the ladder. increasingly, one almost has to be born into moderate wealth to even have much of a chance. i'd like to see that change. on one hand, i see a lot of crumbling infrastructure, an insufficient electrical grid, and a failing energy model that is a national security issue. on the other, i see a lot of people desperate for work. i propose that we join the two and solve some problems.

PeteEU said:

My mind is always open to new macro-economic ideas.. problem is that "sovereign debt problem" is not new, it is old and when it is combined with kitchen table economics based on ignorance.. then you have a problem

Person with debt vs GDP of 300+% .. not a problem!
Country with debt vs GDP of 100%... major problem!

Explain to me why the first is not a problem.. but the second is?

Click to expand...

Not hard to figure out, once you realize that the term "debt" is being misused. What is really being talked about is credit debt, not total debt.

Total debt is not only how much to service credit debt, but total expenditures also.

In the case of individuals, they have their credit debt and then there is such things as insurance, food, clothing and if their home is not part of their credit debt, rent. Put all of that together and that is their total debt. An individuals "GDP" is their net income, or gross income if you want to add taxes to the total debt. An individual can sustain 300+% "GDP" because they do not apply all of their "GDP" to total debt, if they do, then they go bankrupt. An individuals GDP is usually equal to their revenue. I have a house and a car, my only credit debt, approximately 217% of my revenue. I pay $1,500 or approximately 30% of my income to service that debt, leaving me 60% of my revenue for other debt, since my total debt is far below my revenue, less than 50%, I can easily sustain this.

In the case of a country, first they do not get 100% of the GDP as income. They only get a percentage of it. Their revenue is not equal to GDP. Next, 100% of their revenue is used to service total debt. For example, the US has tax revenue of 26.9% of GDP, that means that our credit debt at 100% of GDP is actually around 400% of revenue. In the case of Japan, their revenue is 28.3% of GDP, so their credit debt of 229% GDP is actually approximately 700% of their revenue (very rough estimate, if you want to do the math, go ahead). 100% of a countries revenue, even without credit debt, is still spent on debt. A country, with 0 credit debt still pays a total debt of 100% of revenue, if not the tax payers are going to scream about paying too much taxes. So a country like the US, which has about 400% credit debt, we pay 5% of our revenue to service credit debt, but the rest goes to other debt, so the total debt comes in around 595% of revenue. With 100% of revenue already going to debt.

That is why the first is not really a problem while the second is a massive problem.

Here is what happened to the money.

washunut said:

Interesting observation. Seems like exactly the course Obama wants to follow!

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Not really

Japans bridges and railway network were before and still are in very good condition and efficient. US bridges, railways schools, road network etc are all in various states of disrepair and do need upgrading. Perhaps after 15-20 years of economic stimulus being used for infrustructure then we could say that is the course Obama wants to follow. It was done to build the interstate freeway network, but once that was complete, they did not build interstates to connect towns of 100 people 500 miles away to the system

Lord Tammerlain said:

In Japan's case it is not social services that is the cause, but excessive infrustructure spending on projects that are unneeded and wasteful.

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Not that I am saying this is wrong, but do you have unbiased links to back up this statement?

Helix said:

i'm not promoting soaking the rich to just give money away to people who won't work. we have a lot of nation building to do right here at home, and we should reallocate tax dollars and let the marginal rates go back to 1990s levels so that we can do that. the middle and lower socioeconomic classes spend what they make because they have to. this spreads the money out locally, and more efficiently than concentrating most of it in one place. it adds liquidity, and sustains a wider economic ecosystem. and people can still get quite wealthy; in fact, more will have a chance. the problem is that, whether by design, inadvertently, or both, rungs have been removed from the ladder. increasingly, one almost has to be born into moderate wealth to even have much of a chance. i'd like to see that change. on one hand, i see a lot of crumbling infrastructure, an insufficient electrical grid, and a failing energy model that is a national security issue. on the other, i see a lot of people desperate for work. i propose that we join the two and solve some problems.

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too bad you are not running for political office
not only do you comprehend the complex problem, but you can explain it so that anyone listening/reading could understand
and besides recognizing the problem you offer a common sense approach to solve it
why are so few with such abilities on our ballots

justabubba said:

too bad you are not running for political office
not only do you comprehend the complex problem, but you can explain it so that anyone listening/reading could understand
and besides recognizing the problem you offer a common sense approach to solve it
why are so few with such abilities on our ballots

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thank you for the kind words.

the reason that no one is proposing such a plan is that it would likely be considered too extreme for either of the parties to embrace, at least currently. there is a point of economic malaise at which such an initiative would receive support, but i suspect things would have to be a lot worse than they are now. it took an extended depression last time. i'd prefer to correct course before that happens.