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Old 09-12-2009, 04:19 PM
 
Location: Great State of Texas
86,093 posts, read 69,929,185 times
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Looks like the incoming Japanese government is not so beholden to the US and they are going to go over their agreements made to the US.
They also blame the US for this current crisis.

Incoming Tokyo government threatens split with US - Telegraph

Now do you folks remember I posted over the summer an interesting link regarding those supposedly counterfeit $134 Billion of US Treasuries and other bonds being intercepted by the Italian border police? Those two tourists carrying the bonds got released and disappeared and they were both Japanese. No follow up or closure seemed to have hit even the fringe news sites..the story just died. Here's a link with that story:
Case of $134-billion T-bond bust fuels conspiracy theories | Money & Company | Los Angeles Times

I just think it's very tin foil and interesting. Does it mean anything ?
Who knows..but we are in very interesting times with several world powers now moving away from the US in terms of funding our debt.
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Old 09-12-2009, 04:42 PM
 
Location: Warwick, RI
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So what? Who needs the Japanese anyway? Their economy has been a black hole since the late 1980s - they invented zombie banks! And besides, they have refused to open their own markets to almost all US made products for decades. Sure, they like to SELL us their crap, but for the most part, they won't buy ours in return. Now, with our economy hurting, they look for a better deal, probably from China. Fair weather friends - who needs 'em?
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Old 09-12-2009, 05:17 PM
 
Location: Great State of Texas
86,093 posts, read 69,929,185 times
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Quote:
Originally Posted by treasurekidd View Post
So what? Who needs the Japanese anyway? Their economy has been a black hole since the late 1980s - they invented zombie banks! And besides, they have refused to open their own markets to almost all US made products for decades. Sure, they like to SELL us their crap, but for the most part, they won't buy ours in return. Now, with our economy hurting, they look for a better deal, probably from China. Fair weather friends - who needs 'em?
Well the US relies on other countries buying our debt to fund our "consumption". We are a consumer nation, not a producer nation.

If they stop buying, we're toast.
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Old 09-12-2009, 05:40 PM
 
Location: Conejo Valley, CA
12,476 posts, read 16,980,854 times
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Quote:
Originally Posted by HappyTexan View Post
Well the US relies on other countries buying our debt to fund our "consumption". We are a consumer nation, not a producer nation.

If they stop buying, we're toast.
Hogwash. The US does not rely on other countries buying our debt, rather these countries purchase our debt because they run trade deficits with the US to support their export economies.

Japan if anything is more short sighted than the US, they think they can continue to sell their crap to the world without buying anything in return. The only way you can do that is by continuously buying foreign assets and "printing" money.

The only way Japan can stop purchasing US debt is if Japan reduces its exports to the US. What happens if they reduce exports? We get our products from other countries and/or produce it domestically. Far from "toast".

Japan has already reduce the amount of US debt they purchase because ahem...they have reduced the amount of goods they export here.

Being a "producer" nation is not a virtue. It means supplying other nations with credit so they can purchase your crap. The US needs a nation that trades fairly with other nations and has balanced trade. The trade deficit has improved greatly over the last 1-2 years and we are not too far from having balanced trade.
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Old 09-12-2009, 05:59 PM
 
Location: US Empire, Pac NW
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Quote:
Originally Posted by user_id View Post
Hogwash. The US does not rely on other countries buying our debt, rather these countries purchase our debt because they run trade deficits with the US to support their export economies.

Japan if anything is more short sighted than the US, they think they can continue to sell their crap to the world without buying anything in return. The only way you can do that is by continuously buying foreign assets and "printing" money.

The only way Japan can stop purchasing US debt is if Japan reduces its exports to the US. What happens if they reduce exports? We get our products from other countries and/or produce it domestically. Far from "toast".

Japan has already reduce the amount of US debt they purchase because ahem...they have reduced the amount of goods they export here.

You're forgetting that deficit spending also contributes to debt levels and thus necessitates the Treasury auctioning off the debt to creditor nations and individuals or corporations & funds. Thus, your argument that they only need to buy our debt due to a trade imbalance is flawed. Further, foreign wealth funds and foreign investment banks buy corporate debt which our corporations then in turn create revolving debt (in addition to using their own stockpile of money). Therefore, you are mistaken that debt is a zero-sum game relying solely on trade. Read up on debt and finance ... it's somewhat obtuse but it is not as complicated as some make it out ot be.

I agree that we have the ability to counter Japanese goods these days because a side effect of Quantitative Easing (aka printing money) which the Fed is doing is that the dollar is now very weak. Last I checked the yen was at 90 yen to the dollar. That's nearly a 40% dive from the high. Thus American goods are now cheaper. We've already seen a rise in exports, especially among big ticket items (industrial machines, airplanes, military tech, and investment in our infrastructure). Therefore, a weak dollar is good for our economy as 1) it will increase our products' competitiveness on a world scale and 2) assuming that the Fed can walk the fine line of funding & monetizing the debt + unloading their own investments through time, then we will see some inflation at home but nothing outrageous. It's also cyclical ... now Ford and some GM products finally have the quality that most Americans want, and Toyotas on the other hand have terrible build quality, Nissans look awful and gaudy, Mazdas look like childrens' toys, and Subaru is still just the perview of grunting teenagers saying "hey lookie me in mah WRX VRRROOOOM!" and granola eating hippies who take too long to get up the mountain in their 10 year old outbacks.



Regarding the incoming Japanese government, I know that most Japanese want to keep good USA relations. Most normal people are OK with the USA, and I know this because I travel there and my wife is Japanese, so she and I talk about it once in a while.

Once the new government is brought to power and realizes the fine line they must walk, they'll tone down their rhetoric. Personally, I think it is refreshing to see a government that isn't a yes-man to Uncle Sam. They're not a colony of ours. For example, why should THEY have to pay $6 billion to relocate the Okinawa base? Also, if they do not support the war in Afghanistan, why should they let our refueling tankers land on their soil? More importantly, why should they let our ships dock in their harbors when all we seem to do is rile the Chinese? We got Guam and Pearl Harbor, we really don't need Japanese bases.

In the end, we'll see some re-evaluation but not much new will be done. The Japanese are smart and know that if they rile us too much we'll slap tarriffs on their products like cars and electronics, and they know their military isn't strong enough to mount a campaign and would likely ask for our help (say, if North Korea goes berserk and launches a few nukes, they need our tech to knock them out of the sky, or if China goes nuts and decides to re-take Taiwan and assert control over the South China sea, Japan would want our help to defend against any incursions). It's a sweet deal if you ask me - they finance our debt so we can spend on their products and on military tech, and they can save money on military to spend on their own infrastructure and pay down their own debt ... remember they have a crazy high debt / GDP ratio ... something over 100%.
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Old 09-12-2009, 06:20 PM
 
Location: Conejo Valley, CA
12,476 posts, read 16,980,854 times
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Originally Posted by eskercurve View Post
Thus, your argument that they only need to buy our debt due to a trade imbalance is flawed.
No its not, the Japanese are not buying our debt because they think its a great investment, or because they are nice guys. They are buying our debt because they are running a trade surplus with the US.

The US can fund its deficit in a number of ways that do not involve the Japanese.

Quote:
Originally Posted by eskercurve View Post
Therefore, you are mistaken that debt is a zero-sum game relying solely on trade. Read up on debt and finance ...
No mistake at all. A foreign investor needs to first obtain US dollars before they can make a loan to a US company (who deals with US dollars). But how does a foreign nation get US dollars? By trading.

International purchases of debt are directly tied to global trade. A foreign country cannot purchase US debt, unless that country (or a chain of such countries) has a trade surplus. Otherwise, there would be no dollars to invest as they would have all been spent already on goods/services.

All of this "the US is toast" junk is based on basic misunderstandings of the global currency regime. Under the current regime, the US is far from toast, instead it has gotten a bunch of free stuff.
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Old 09-12-2009, 07:30 PM
 
440 posts, read 1,169,414 times
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i think we ought to put a leash on them, they are the only country that had bombs dropped on them and we are the one dropped those bombs...the existing arrangement/relationship is working perfectly for us, why rock the boat, whatever we've been doing to keep this arrangement, let's not change the course...
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Old 09-12-2009, 07:41 PM
 
Location: Charlotte, NC, USA
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The US does depend upon other countries purchasing its debt. The worlds appetite for US debt keeps US interest rates low.

I think the biggest news out of Japan is their new negative attitude towards free market globalization.
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Old 09-12-2009, 08:07 PM
 
Location: Warwick, RI
2,546 posts, read 3,860,531 times
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Quote:
We are a consumer nation, not a producer nation. If they stop buying, we're toast.
Quote:
You're forgetting that deficit spending also contributes to debt levels and thus necessitates the Treasury auctioning off the debt to creditor nations and individuals or corporations & funds.
Quote:
The US does depend upon other countries purchasing its debt.
These are exactly the types of things that we need to change. We need to STOP running government deficits, STOP buying their crap, and start making more stuff here in the good old USA again. I don't care what anyone says, we will never truly be a great nation and have a great economy again unless we bring manufacturing back. Lower taxes and do whatever we can to improve the business environment here and BRING OUR MANUFACTURING JOBS BACK!
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Old 09-12-2009, 11:04 PM
 
4,711 posts, read 10,529,600 times
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Quote:
Originally Posted by treasurekidd View Post
....Lower taxes and do whatever we can to improve the business environment here and BRING OUR MANUFACTURING JOBS BACK!

Until US workers will accept 20 cents an hour....manufacturing jobs ain't coming back.
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