Shocker: Next Sovereign Debt Crisis Four Times Worse

Economists every where use ABSURD FRACTIONS to derive comfort for potential issues. Dividing government debt by GDP is an example of absurd fraction. Instead divide government debt by FUTURE SURPLUS or DEFICIT. As you can see, most governments will NEVER have a FUTURE SURPLUS. Thus their debts will only keep balloning until something happens to prick them. We have seen this happen in many south american and african countries before. When will it be the turn of western economies?

To me the more interesting question is ….. So why hasn’t Japan’s growing debt or the decline in their savings rates not created a problem there long before now, like in 2009 after the credit markets froze.
Given the relative stability there one could almost argue that they are living proof those levels of debt are not neccassarly problematic. And if in a counry where cultural and societal philosophies prevent many expansion creating tools from being used (like growth through imigration) that might illiviate some of the debt pressure and it still hasnt been a proble ……….how bad can it really get in places like the US that can open the imigration floodgates and generate economic expansion spread the debt over a larger population

It is a wonder how the Japanese government is able to carry twice the debt load of the US, and still Japan is seemingly doing well. Granted the Japanese economy, and its stock market are supposedly in a multi-decade recession, but its economy seems to be stable and functioning rather well. Does this mean that the US will be able to double the US government debt load, and still function seemingly well like Japan?

The Japanese government does not have a large military like the US, because after the defeat of WW2, the Japanese government is prohibited from spending a lot of money on the military, nor station troops, or fight wars on foreign soil. This saves almost half the cost, as compared to the US, which about half of the US government budget is on defense. It is a great budgetary advantage for the governments of countries like Japan, Germany, and others which do not have to spend almost half their collected tax revenue on defense.

About half of the US government budget is spend on social programs like medical programs, food stamps, (although this is only a fraction of 1 percent of the total budget,) safety net programs, and the like. According what I saw on a PBS documentary on universal health care of different nations, Japan seems to have a fairly low cost universal health care program. The US has what many say an expense, and even out of control healthcare system.

Many of the US social program spendings are really “welfare for the rich” programs, if you follow where the money really goes in these social programs for the poor. If the trillions of dollars of money spend on these programs for the poor really went to the poor, the poor will no longer remain poor, logic would say. In reality the trillions if fact did not go to the poor, and thus the poor remain the ever growing poor. For example, the food stamps receivers got stamps, and they did not received cash. The actual money in the food stamps program when to the rich food store owners, the food manufacturers and food distributors, and the large farmers and ranchers. The same with the medical programs in the US. The poor patients did not come out of the doctor offices, and the hospitals with more cash in their pockets, as these programs did not gave actual cash to the patients. The actual money went to the doctors, hospitals, drug companies, and medical equipment manufacturers.

The US government supports more basic-science research like in universities than Japan. In the past, Japan just copied the fruits of science research of other countries, which saved a lot of money and time. Now, Japan does more science research, but probably on on the scale of the US.

I don’t know much, or even anything much on how the Japanese economy works, as I have not made any study of it. I guess the only thing I know is that the Japanese car industry dominates the massive global market for middle-income cars. The makes the Japanese currency desirable, as it can be used to procure their desirable cars. This allows Japan oil, which it does not produce. Japan seems to be self sufficient in growing food, and it borders the Pacific Ocean to fish. Plus, the standard Japanese food serving size is smaller, as compared to the US food dish. Small food portions actually is more healthy, as scientific experiments have shown, that people, and animals that eat less, live longer.

I don’t know why the Japanese government deficit is twice the US, as it don’t have much military spendings, and its healthcare system seems to be efficient with people not overeating and staying healthier. They seem to do very expensive infrastructure projects. I have the impression that Japanese companies have low profit margins to compete in the global markets, which will decrease tax revenues for the government. There is a small percentage of very rich, while the remaining larger percentage of people have fairly low incomes.

I would guess if Japan maintains the dominance of its cars, and other technologies, it can do well. It sits at a strategic position geographically, so that the US had on numerous occasions pampered Japan to access its seaports starting with Commodore Perry.

There are things that puzzle me about this analysis. Both the Japanese central bank and the United States Fed can always print up new money to pay both the government’s debts and those of privately-owned banks and corporations. These banks are not profit-making institutions, They can always forgive debts that are owed to them, roll them over, give new loans to allow companies, as well as the government, so that neither the state nor private companies ever have to get out of debt. “Sovereign” dept could be 50 or 100 times the GDP without doing any harm, as long as the central (government-owned) bank is willing to create the money needed to keep the economy going and pay off creditors. So what’s the big deal? Dr. Weiss, please explain in your next column why money-printing doesn’t solve the sovereign-debt problem as well as the corporate indebtedness problem. It seems like a fool-proof solution to me–even though it defies conventional business morality.

There are Youtube commentaries that claims that Canada, an oil producing exporter, is have problems with it currency that dropped a quarter of its value since the recent drop of oil prices. There is even claims of food shortages there, caused by the large rise of food prices of foods imported from the US after the drop in their currency value versus the US dollar. There are claims that Canadian real estate bubble may burst, and Canadians are issuing mortgage backed securities. Mortgage backed securities were the trigger that caused the US 2008 Great Recession.

Under every regular oil field in the world are shale-oil layers. Only the US (and the Northern part of of the Baken shale oil that extend into Canada) is currently doing frac oil extraction of its shale oil at three major fields: Permian Basin, Eagle Fort, and Baken shale oil fields. There are dozens to hundreds more shale-oil fields world wide, as under every existing regular oil field are companion shale-oil fields. This is because the shale-oil layers are the source rock of all of the existing regular oil pools.

So far oil producer Venezuela has been hit the hardest by the oil glut, as its oil is heavy, and cost more to produce. Canada tar sands oil is also expensive to produce. Now, a new report from the university labs of the man who invented the current lithium ion battery, that a new type of “glass” sodium battery may have three times more capacity, a lot safer, may be able to be recharged ten times faster, and potentially a lot cheaper. If this new glass-battery makes into commercial production, electric cars will become a lot cheaper, go farther on a charge, and be recharged much faster. This may enable electric cars to displace gasoline cars on a massive scale, which may cause a huge decrease in the demand for oil with drastic drops in oil prices. If this happens, many current major oil producing countries that are heavily dependent on high oil prices will collapse economically with their currency collapsing, and with hyper inflation breaking out if any of them are dependent on foreign imports of essential goods like food.

The new glass-battery has to potential to create a huge wave of economic change that will collapse many oil producing countries, while enhancing the economies of oil dependent countries. A major reversal of fortunes of countries may be coming.