Japan crisis - the worlds economic outlook?

1984ReturnsForReal_2

Gorjao wrote: »

They are now saying its going to keep spewing radiation for another 9 months!!!!!!!!!!!!

Why cant they do something in a shorter time frame, there must be other options even extreme ones.

The only other options result in mass death.

Generali

jpmorgue wrote: »

The Japanese government has announced a 4 trillion yen ($48.9bn; £29.6bn) emergency budget for disaster relief, after March's earthquake and tsunami.

http://www.bbc.co.uk/news/business-13167014

The budget will be financed by taking 2.5tn yen from pension funds, as well as money set aside to increase payments to families with children.

Money from emergency reserves is also being used.

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Can I ask what is maybe a silly question? This is the economy forum after all.

Soon after the disaster first happened Japan created several trillion Yen and added it to the currency supply. Where did all this go, who got it and where is it now?

Why take money from pensions and child benefit now?

Cant they just create another 25 trillion Yen out of thin air like they have been doing for years?

I know it takes a while to get your head round currency creation, but no one has been able to answer why they need to take currency from somewhere, why not just create it like they have been doing? The USA is creating billions of dollars (trillion of yen) every month, why doesnt Japan just do the same thing.

Then they will catch up with the USA in the race to debase the worlds currencies.

It's a good question. CPI for February in Japan was 0.00% so inflation clearly isn't a problem.

However, Japan does have a big problem with Government debt. The Government owes 225% of GDP and counting. Now while the Government could issue debt and have the Bank of Japan buy back that debt with 'printed' money, eventually it has to assume that all debt is going to have to be sold to the market. Even in Japan there is a limit to the amount of debt the market will take.

The difference between the US Dollar and the Yen is that the Dollar is, for now, the world's reserve currency so they can print as much as they like within reason. As John Connally said, "The Dollar is our currency but it's your problem".

Generali

TheCollectorsCoach wrote: »

What is your opinion of the US Dollar Gen? Will it keep falling as it has been doing? How long do you think it could survive now?

The Yen used to be one of the safer currencies short term anyway, but this has changed everything.

There are now only 2 safe currencies in my opinion they begin with the letters G and S

Well the Americans can't keep on going as they are which means at some point it'll have to stop. Either they can stop at a time of their own choosing or Mr Market will force them to stop in the end.

The trouble they have is that neither the Democrats nor the Republicans are really prepared to grasp the nettle. Something like 7/8ths of the US budget is so-called 'non-discretionary spending', things like pensions and health care for poor and old people. The political parties are spending their energies and political capital arguing about the remaining 1/8th.

Gold and silver aren't currencies as they can't be spent unless you convert them into money. In that way they're like any other asset except they're worse than most because they don't produce an income.

vivatifosi

Came across an interesting website the other day that's relevant to what's happening in Japan. If you follow this link:
http://www.npa.go.jp/archive/keibi/biki/higaijokyo_e.pdf
you'll see how many people are still missing as a result of the tsunami and just how many properties were damaged as a result of the tsunami, earthquake and fires that happened as a result. About 100,000 buildings were destroyed or extremely damaged and over 200,000 have experienced damage. That's before you get onto the 3,000+ destroyed roads and the rest of the infrastructure that needs repair or rebuilding. To put that into context, that's 20% of the number of buildings that were destroyed or damaged in London during the blitz (though granted, the mix of building may have been different). That's without the subsequent impact of abandoning a semi-circle 40kms in diameter, or closure of manufacturing that's brought. Nor does Japan have a Marshall Plan to help it.

vivatifosi

jpmorgue wrote: »

Whats a marshall plan?

It's the plan that was put in place after WW2 to help rebuild Europe, for which we have much to be grateful to America. See:

http://en.wikipedia.org/wiki/Marshall_Plan

Generali

jpmorgue wrote: »

Brazil was the first to move, allowing their currency to break through the 1.65 level. We are now dealing at 1.5660. Colombia was next, allowing 1860 to break. We are now trading at 1780. This was then joined by Singapore, Taiwan, Korea, Chile and other nations.

The UK and the mighty Bank of England was unable to hold the pound in the ERM. Large countries like Brazil and Argentina have been forced to drop a peg with the USD on many occasions.

Do you really think that countries like Colombia, Chile and Singapore are able to dictate to the FX markets, which have a daily turnover of about USD4,000,000,000,000, at what level their currencies will trade? Think about it for a moment. Mr Market trades more in a day than even the Chinese hold in reserve in total.

purch

So u disagree with that Faroe report

Whoever wrote the quotes you have taken from Kingworldnews, clearly does not have a clue about what they are talking.

No country with a floating currency in the history of ever has been able to dictate the trading level of their currency.

Brazil, Columbia, etc have no power or ability to to dictate the level of their currency.

Cleaver

jpmorgue wrote: »

So u disagree with that Faroe report.

I love the disclaimer on that KingWorld'News' site:

King World News comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of credible sources. We recommend that you consult with a licensed, qualified professional before making any investment decisions.



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Officers, directors, employees and associates of King World News may, from time to time, invest in, buy or sell securities, commodities and derivatives issued by or linked to companies whose principals appear as guests on the King World News website; such investments, purchases and sales may take place before or after such appearances.

http://kingworldnews.com/kingworldnews/KWN_Disclaimer.html

They could have simplified by it by saying:

"This news site isn't really a news site, it's just us making stuff up and giving our opinion on things. Then we just dress it up as a 'news' site. We don't know if any stuff on here is correct and we're sure as hell not going to stand by any of it. Oh, and you know when we ramp something on here? You need to know that all the staff here are often invested in that something and that's why we do it. But that doesn't matter, as it may be all made up anyway. Y'all have a nice day now."

purch

Yes, using KingWorldFantasy as your main source of economic information, whilst at the same time never having heard of the Marshall Plan is quite worrying.

1984ReturnsForReal_2

TheCollectorsCoach wrote: »

Inflation may be a problem if Japan keep on expanding the currency supply. They do want the yen to come down so the chances are the will add more trillions to the supply again.

Loss of tax revenue is the problem