Tuesday, November 6, 2012

Japan Debt Now 237% of GDP!!!

It has come without much fanfare. In fact, it wasn't even headline news that I saw. Bloomberg now reports that Japan's debt to GDP has hit 237%. Well, they didn't really "announce" it... It was hidden in another article...

No money? No problem, just borrow more!

From an article about the US debt entitled "G-20 Tells U.S. to Avoid Fiscal Cliff as Focus Widens" buried deep-down in the 19th paragraph, it says:

Japan, which has a debt of 237 percent of GDP, is also facing fresh budgetary challenges. Its Ministry of Finance is warning that a refusal by lawmakers to authorize 38.3 trillion yen ($476 billion) in borrowing risks leaving the government unable to hold debt auctions as planned.

Incredible! The Ministry of Finance wants to fix our debt problems by taking on more debt. Well, why not? Look how well it has worked these last 20 + some years!

What is really amazing is, though, it was just last May 22, 2012, to be exact (less than six months ago) that Bloomberg announced that Japan's debt had hit 220% of GDP. From "Japan Must Raise Taxes as Debt to Top 220% of GDP, OECD Says"

Gross public debt will be 223 percent of GDP next year, up from the projected 214 percent in 2012, “pushing Japan’s public finances further into uncharted territory,” the Paris-based OECD said in a report released today.

Only 223%? We wish. 

Folks going from 220% in May 2012 to 237% in November 2012 is almost a 9% increase in six months! At that rate it is equal to 18% a year. 

Those increases are worse than the rates you get when you take loans from yakuza loan sharks.


Everyone knows how "Exponential Growth" works, right? 

Exponential growth says that whenever growth is at a constant percentage, to see how long it will take for any number to double itself is just to take that constant percentage and divide it into 70.

At 18% growth, Japan's debt will double in 3.8 years. That means that Japan, continuing at this rate, will have a debt to income ratio of 474% by about summer of 2016... By 2020, Japan's debt will be 948% of GDP.

This isn't a guess, folks. This is simple math. 

Better get your financial house in order. This cannot go on like this.

Watch this and imagine that this is our debt....

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