Subject:	Government Debt? Bad? Why, Of course not!! Just think of it as borrowing from yourself.
Date:	1999/06/24
Author:	Paul Milne <fedinfo@halifax.com>
	Posting History

ANALYSIS-Japan's debt burden: A phantom crisis? By Linda Sieg   TOKYO, June 24 (Reuters) - Looking for one less thing to worry about? Try crossing a crisis sparked by Japan's bulging debt burden off your list.   That at least is the message from analysts challenging the nightmare scenario which sees Japan's massive government debt as a disaster waiting to happen.   Instead, these optimists argue, Japan's rising debt is far from its outer limits -- and is no obstacle to again dipping into the public pocket to fund stimulus steps that many still believe Japan will need to ensure a long-sought recovery.   ``The key finding is that fiscal policy is not really limited,'' said HSBC economist Peter Morgan, author of a recent report on what he calls ``myths'' about Japan's government debt.   ``They can spend, they should spend, and they will spend.''   That view should be music to authorities' ears, given that ruling politicians are expected, despite recent robust growth data, to craft an extra stimulative budget later this year and want to do so without sending interest rates skyrocketing.   No one disputes that Japan is carrying a heavy load of government debt and that the burden is fast growing heavier.   They do, however, argue over how best to gauge relative size, and more critically, over whether the debt burden is so big that Japan must either turn off the public spending tap or risk a steep spike in interest rates that would kill off a nascent recovery.   The OECD has estimated that Japan's gross government debt will amount to 108 percent of gross domestic product (GDP) this year, significantly above France's burden of 67 percent, Germany's 62 percent, and 57 percent for the United States.   Worries about the ballooning debt crystallised late last year after Moody's Investors Service and Britain's Fitch IBCA lowered their triple-A ratings for Japan, citing the growing budget deficit as a key cause for concern.   Those who are sanguine, however, say Japan's net debt levels, calculated as gross debt minus government assets, are similar to those of other economic powers including those which have top-notch triple-A credit ratings on their sovereign debt.   ``Although Japan's gross debt is expected to reach 160 percent of GDP in the near future, the net debt ratio is much lower, around 60 percent,'' Morgan's report said, adding that figure was close to the average for other OECD (Organisation for Economic Cooperation and Development) nations.   Credit rating agency Standard & Poor's echoed that view in a report last week reaffirming its triple-A rating on Japan's long-term sovereign debt and dubbing the nation's debt burden ``manageable in the context of Japan's economic strengths.''   Why the nonchalance?   In part, contrarians point out, because Japan owes the money almost entirely to itself, or rather its citizens, and not to fickle foreign investors who could shift funds and leave Tokyo in the lurch.   ``The debt is domestically held and you've got excess capacity, so this is still a very different situation from South Korea or Thailand, where foreign investors...pulled the plug,'' Morgan said. ``Japan is still a capital exporter and doesn't depend on foreign investors in the bond market.''   Japan's large foreign net assets, its big current account surplus, and the high domestic savings levels that surplus reflects, mean it can stay independent of foreign investors to finance borrowings, say those who believe the debt is sustainable.     ======   This is one of the funniest pieces of horsehit I have ever seen written.   This is not a disaster waiting to happen. No. May it never be.   (Enter the perception managers)   Never mind that you owe more than you make every year. It is just a matter of how you perceive it. Normally, owing more than you earn evey year would be perceived as a bad thing. But, you don't want to feel bad about it. So change how you perceive the debt and then, everything will be OK.   Just  emphasize that the debt is 'domestically' held. ie that the government has morgaged the futures of unborn citizens.   Which means that whatever the government chooses to spend will have to be borne by the citizens, even those not yet born, so it is Okey Dokey!  You can spend your way out of debt as long as you owe the debt to yourself! See how simple.   If ever a moronic citizenry ever deserved what is happening to them it is the Japanese. Mountains and mountains of unpayable debt which should scare the hell out of anyone and they think that they can go even further into debt.     Japan will be the first major economic catastrophe when the bubble bursts because of ONE thing alone.   Debt.     Paul Milne

-- a (a@a.a), June 25, 1999

Answers

Mr. Milne is wrong. The Japanese are holding close to 350 billion in 10 year US Treasuries which will come due in a few weeks. They will simply redeem them in September. Our 350 billion payment to Japan on September 15 will help bail them out of this crisis. Sincerely, Tom Format

-- tom format (tom format@aol.com), June 25, 1999.

Well! Guess that's settled!

-- Lisa (lisa@work.now), June 25, 1999.

are you saying that the usa is going to just going to hand over 350 billon dollars?is this true?

-- zoobie (zoobiezoob@yahoo.com), June 25, 1999.

Actually, they've tried everything else -- everything responsible -- except assigning the banking and real estate losses to the actual perpetrators. Ain't a-gonna happen. The time has come to socialize losses. "Free market economics", circa 1999.

When in Rome, dump more gasoline and fiddle while it burns.

-- Nathan (nospam@all.com), June 25, 1999.

Mon Jun 28 3:08am ET - U.S. Markets open in 6 hours 22 minutes. %en 121.1 (this means each dollar is worth 121.1) Gee...this time last year it was around 135, by Midsummer it hit 148 This past Winter it got to 110, the Japanese disvalued it because it was doing to well against the dollar.

Last time I checked, their stockmarket was up 25% and was out performing ours.

Yeah...nothings happening over there.

-- lordy (rollings@eyes.com), June 28, 1999.

17,628.32 Close on June 24 15,836.59 Close for fiscal 1998/99 (March 31)

-- lordy (rollings@eyes.com), June 28, 1999.

So that means 350B of my tax dollars are gonna bail out those pesky Japanese???

Where does that leave the USA?

Up shit creek without a paddle as usual I suppose...

Oh well.

-- Andy (2000EOD@prodigy.net), June 28, 1999.

"Mr. Milne is wrong. The Japanese are holding close to 350 billion in 10 year US Treasuries which will come due in a few weeks. They will simply redeem them in September. Our 350 billion payment to Japan on September 15 will help bail them out of this crisis."

Replies to this post included "are you saying that the usa is going to just going to hand over 350 billon dollars?is this true? -- zoobie (zoobiezoob@yahoo.com), June 25, 1999. "

"So that means 350B of my tax dollars are gonna bail out those pesky Japanese???

Where does that leave the USA?

Up shit creek without a paddle as usual I suppose...

Oh well.

-- Andy (2000EOD@prodigy.net), June 28, 1999. "

These replies have to be sarcasam right? You realize that when a Foreign Goverment buys US Federal Bonds they are GIVING us money for us to use for a given period of time, in this case 10 years, plus interest correct? You realize this means that we are GIVING THEM BACK THEIR MONEY PLUS INTEREST! 350 Billion of our tax dollers? Not quite brainy-poo.

You also realize this means we got to use their money right? You realize this is just like a loan right?

*grunt*

-- fed up (nice@try.com), June 28, 1999.

These replies have to be sarcasam right?

***Uh, yep, sorta ...***

You realize that when a Foreign Goverment buys US Federal Bonds they are GIVING us money for us to use for a given period of time,

***Uh, yep,***

in this case 10 years, plus interest correct?

***i.e.we PUOUF some more "money" out of thin air to repay the Japanese... and just what DID the USA do with all this lovely moola which we have had for the last ten years???***

You realize this means that we are GIVING THEM BACK THEIR MONEY PLUS INTEREST!

***Where did we get the interest???*** 350 Billion of our tax dollers? Not quite brainy-poo.

You also realize this means we got to use their money right? You realize this is just like a loan right?

***Calm down, calm down, answer my questions...***

My understanding is if the Japanese pull the plug it will be "not good" for us, correct?

Well? Are deals being struck between Greenspan and Tokyo? what are we promising them?

Answers please fed up @ nice try...

*grunt*

-- fed up (nice@try.com), June 28, 1999.

-- Andy (2000EOD@prodigy.net), June 28, 1999.

"***i.e.we PUOUF some more "money" out of thin air to repay the Japanese... and just what DID the USA do with all this lovely moola which we have had for the last ten years???*** "

How should I know? Do you have an accounting for everything our goverment does with the bond money we get from over the world? Didn't think so. Has no bearing on what we were discussing.

"***Where did we get the interest???***"

Where does anyone get interest from? Probably comes from other loans.

"***Calm down, calm down, answer my questions...***"

Ask questions with some bearing and I will

What I am addressing Andy is the insuation that we are giving them $350 Billion for no good reason. It was their money, we borrowed it, it's time to give it back. End of case.

-- fed up (nice@try.com), June 28, 1999.

OK I can't be bothered going over the fiat money scandal at this time of the morning either.

However a deal HAS been done with the Japanese - Greenspan is not stupid.

-- Andy (2000EOD@prodigy.net), June 28, 1999.

"OK I can't be bothered going over the fiat money scandal at this time of the morning either. "

Wondered when you would just say it.

-- fed up (nice@try.com), June 28, 1999.

OK I bit, you got me good :)

-- Andy (2000EOD@prodigy.net), June 28, 1999.