Economic issue related to the quake

[Guest guest]

I've been reading some articles about the economic impact of this quake.

First off, the insured losses could range anywhere from $30 billion to well over $100 billions, depending on who is doing the calculating. That is not including the increasing toll to be caused by the reactor issues. Those will only cause these numbers to shoot up, especially if radiation makes large areas uninhabitable, not to mention radiation damage to the oceans.

Second, Japan is pumping huge amounts of money into their economy. They are doing this to increase liquidity needed to handle the crisis and rebuild. Of course, this brings the risk of inflation and probably is helping drive down their stock market.

Third, Japan owns something like $800 billion of US debt. This crisis means two things.

1. They are unlikely to be able to afford to buy any more US debt.

2. They might sell some of the US debt in order to raise money for recovery.

Fourth, Large sectors of the Japanese economy have shut down. This includes heavy manufacturing like cars and machinery to electronics. Electricity is already being planned to be rationed for months in parts of the country. What this means is the economy is going to slow dramatically and with it tax receipts. That means heavy debt and trouble if no one can buy it.

Now, take all this together and it is very bad for Japan. It is also bad for the US. They hold a lot of our debt and the wastrels in charge of the US government have had plans to spend like mad for the foreseeable future. If no one will buy the debt at current rates, they will have to raise the interest rates. That means the government will have to spend more each month just to cover the interest on existing debt. This cycle will increase as the government ramps up rates.

If Japan starts selling US debt and can't find buyers, I suspect that will mean the US credit rating will drop. That will naturally mean the cost of US debt will increase. That could really damage the US economy as well. The economy is such that the government can't really tax anymore so they will have to print lots of money which will mean inflation.

[Guest guest]

" If Japan starts selling US debt and can't find buyers, I suspect that will mean

the US credit rating will drop. "

Alternatively, China will buy the debt and call it.

Administrator

[Guest guest]

I've seen an article or two that said China had already used our debt as leverage to make the government do certain things. I'm sure if they did buy it they would use even more leverage.

But this is all what we get for having some on the "right" misunderstand free trade and ship production overseas in pursuit of big profits at the expense of the domestic economy, while on the "left" they rapidly expanded the handouts which were paid for with the debt. If we still had even half of the 8 million plus jobs lost thanks to free trade, I don't think we'd be in quite so much trouble and we'd certainly have an easier time getting out of it. If we didn't have politicians busy mortgaging the country to buy short term power gains, we'd be vastly better off.

Sadly, I think both cases are going to get worse. I'm thinking that once again the US government is going to try to inflate away its debt and that will be really bad. It will break the middle class and grind down the kulaks until there is nothing left but government and government approved jobs and a few union posts and loads of people barely subsisting on the dole.

In a message dated 3/15/2011 2:39:36 A.M. Eastern Daylight Time, no_reply writes:

Alternatively, China will buy the debt and call it.Administrator