[ohanian]

Japan Default?

Those two words will never come together in a single sentence.

[PrestonSturges]

I have to wonder if all the major players have agreed to let their currencies devalue in unison, screwing everyone that saved for retirement but absolving the various governments of their debt. China would be left holding the bag with worthless bonds, so they'd get sucked down with the rest..

[Tyler_JC]

That could cause a default all by itself.

5 workers for every 4 retirees. The math just doesn't work.

[pup55]

Hey, I just love these population profile charts....

Also, by 2050 for some reason, there will be an overabundance of 90 year old women, if you are a 90 year old man, you will be in business....

Seriously: the US has exactly the same problem as Japan, but offset by a few years... The way we solved our problem is by opening the borders..... We let 20 million foreigners in, they reproduce, they change the society a bit, but at least it keeps going. That is why "amnesty" or whatever you want to call it, is inevitable.

Japan, being the wonderful little island nation that it is, did not do that. They're still 99 percent Japanese....

[frankthetank]

Pup-

Being a native, i'm poking everything i can... got to do whats right for the economy!!

I can't imagine Japan could be so screwed... there country seems so perfect? I've heard its like nowhere else because of how clean, on time, and well mannered the Japanese are... I like when George Costanza keeps giving those Japanese TV execs oranges... good episode (The Super Terrific Happy Hour)...

[Mudpuppy]

Yes, it is certainly true how high the Japanese debt is. However one big difference is that almost all of that debt is held in the form of bonds that are purchased by Japanese citizens. If the country defaults on its no one outside of Japan looses the cash. Just the Japanese themselves.

The average Japanese family until recently had $250,000 USD equivalent in savings, most of which is held in Government bonds. I have often been amazed that people I know here in Japan buy bonds for such little interest return. But they justify by pointing out that no banks in Japan insure deposits so if their bank goes down they loose everything (And the banks themselves are also paying as little interest). So many see it (rightly or wrongly) to put their money into the government. It is also seen as a patriotic thing to do. Kind of like war bonds but in a time of peace.

It is true what the other poster said about immigration and the resistance against it in Japan. I have lived here for 6 years, but certainly the door is not an easy one to walk through.

Much of that excessive spending is used for stimulus projects (I.e; concrete over a hillside ostensibly for landslide protection) which supports the rural economy. The new government plans to divert those useless projects funds into things like getting the agricultural production back on track. But the problem is 90% of the farmers are over the age of 65 as young people rather take higher paying jobs. Another side to the chronic coming labour shortage.

[ohanian]

pup55 says

Also, by 2050 for some reason, there will be an overabundance of 90 year old women, if you are a 90 year old man, you will be in business....

Dude, if you are a 90 year old man in Japan, you will have a big problem coming (pun fully intended). Even if you are surrounded by 90 year old women.

[rangerone314]

5-4 worker/retired ratio... I guess those lazy Japanese workers are going to have to work a little harder for a change, LOL!

[deMolay]

Look at the trade numbers. http://www.thedailybell.com/578/Japan-S ... uptcy.html

[mcgowanjm]

And since 2007 the US has been following the exact
Japanese Monetary Policy of the last 2 decades.

Fool Same Over Expecting Different Results

[kiwichick]

japan imports 80% ? of its oil

[eXpat]

Behold the main holder of US treasuries. Wheeeeeeeeeeeeeeeeeeeeeeeeee !!!
"If The US Can Do It, So Can We": Japan To Keep Pumping Cash And Monetizing Debt Until Deflation Goes Away

And with that Japan joins the competitive devaluation currency race, in which both the SNB and Federal Reserve have a substantial head start (the euro and the fat Brussels bureaucrats are in a ouzo daze, with no clue what the hell is going on). Speaking before lawmakers BOJ governor Masaaki Shirakawa, who recently said Japan was powerless to fight deflation on its own, has changed his tune, and today said that Japan will print the kitchen sink if it has to to beat "stubborn deflation."

In a speech before the Lower House Budget Committee Shirakawa said that not only will Japan continue monetizing its debt (at least unlike Bernanke, he admits it), but that they will happily accelerate this action if it means killing the Yen and creating a glimmer of hope for inflation. Carry traders everywhere rejoice.

"Overcoming deflation and returning to a sustainable economic recovery path under price stability remain a vital issue for the BOJ. We will continue injecting ample liquidity into financial markets to overcome deflation."

Shirakawa noted that monetization is happily chugging along: "We are buying JGBs in order to inject ample funds into financial markets in a stable manner and we are buying Y21.6 trillion of JGBs annually" and he made it clear that adjusting for scale differences, the Japanese monetization program is three times faster than the Fed's Treasury QE - in other words assume that Japan has bought the equivalent of nearly $1 trillion of its own bonds, adjusted for something or another.

And rising the specter of Richard Koo, Shirakawa also added that excess liquidity alone would be insufficient, saying that new initiatives from the government and the private-sectors would be needed to generate new demand.

link

[Tanada]

japan imports 80% ? of its oil

Japan is made up of a long string of volcano's, not the kind of rocks you are going to find a lot of Petroleum deposits locked up in.

[Ferretlover]

If I remember a Discovery Channel program on that airport that was built (and is sinking), Japan is also located on the intersection of four or five tectonic plates.

[Oilguy]

SITUATION: Japan is advancing with plans to reprocess spent nuclear fuel and boost its external nuclear exports. These decisions will impact the conduct of Japan’s global non-proliferation diplomacy.

ANALYSIS: Assessing the degree of salience to Tokyo of non-proliferation goals will be aided by monitoring its policy in two areas: its negotiating strategy in nuclear technology supply talks with other states, and especially India, and its management of its internal nuclear power program. Other aspects of its nuclear diplomacy, including pressure for North Korean disarmament and support for enhanced global nuclear security, are likely to remain robust.

External Trade Ambitions: Tokyo signalled its dedication to capturing a larger share of the international nuclear energy market by establishing a new export company, International Nuclear Energy Development of Japan Ltd (JINED), in October 2010. JINED is owned by the Japanese Ministry of Economy, Trade and Industry (METI). Several Japanese nuclear technology manufacturers (including Hitachi, Mitsubishi Heavy Industries, and Toshiba) and electricity providers (including Chubu, Kansai and Tepco) are affiliates. This company will coordinate Japanese nuclear negotiations and exports, illuminating government intentions to integrate nuclear supply and service packages for the international market.

Japan is presently engaged in nuclear cooperation negotiations with Turkey, Vietnam, and India. Japanese diplomats are scheduled to meet with officials from the Turkish Ministry of Energy and Natural Resources in early December. Ankara is seeking an international partner to assist in construction of a nuclear power plant at its planned Sinop site on the Black Sea coast.

Having been unsuccessful in pressuring South Korea to lower its proposed price for electricity provided from the reactors, Turkey has invited Japan to offer better conditions. The outcome of its negotiations with Japan will highlight the assessment of both Tokyo and Seoul of the importance of Turkey’s emerging nuclear energy market, in clarifying their willingness to offer a lower electricity price and reduced profits in order to obtain a foothold in Ankara’s nuclear program.

Japanese Prime Minister Naoto Kan and Vietnamese Prime Minister Nguyen Tan Dung agreed on 31 October that Tokyo would assist Hanoi in building a second nuclear reactor in the Ninh Thuan region.

Indian Nuclear Negotiations: Although it agreed as a Nuclear Suppliers Group (NSG) member to exempt India from multilateral nuclear trade restrictions in 2008, Japan is yet to conclude a bilateral civil nuclear cooperation agreement with India.

In previous rounds of negotiations, Japanese diplomats have sought to obtain a clear signal of movements toward a permanent ban on Indian nuclear testing. The adherence of New Delhi to this condition would significantly go beyond previous assurances in this area. In its diplomacy to secure the 2005 US-India agreement and Nuclear Suppliers Group exemption, New Delhi refused any linkage of civil nuclear cooperation terms to its military behavior in the agreement text. Instead, India offered a separate statement of vague support for global efforts to ban nuclear testing and end military fissile material production without firmly committing itself to these goals.

Access to Tokyo’s nuclear expertise represents a valuable goal for New Delhi. In addition, major American nuclear firms - prominently, General Electric and Westinghouse - are owned or part-owned by Japanese companies. Further delays in agreeing terms for Japan-India civil nuclear cooperation could therefore also affect American entry into the Indian nuclear market. It remains to be seen if Japanese commitment to global nuclear risk reduction goals outweighs its commercial interests in participating in the lucrative Indian nuclear energy market.

Whether Tokyo insists upon a robust Indian commitment to these goals as part of the treaty text, or moderates this to a familiar Indian statement of support separate to treaty terms, will illuminate this Japanese internal calculus.

India’s obvious geopolitical potential in helping Japan balance a rising China, and the effect prolonged negotiations could have on Indo-Japanese relations, will also be taken into account by Tokyo.

Internal Energy Developments: Japan is the only non-nuclear weapons state under the Nuclear Non-proliferation Treaty to operate a ‘full’ or ‘closed’ fuel cycle, involving extraction of plutonium and uranium from spent nuclear fuel and reprocessing to manufacture new fuel elements. This process involves handling of significant quantities of fissile materials, which could be used for military purposes. Japan’s decision to manage its nuclear energy sector in this way, rather than the cheaper ‘once-through’ cycle involving using nuclear fuel once and moving spent fuel to a long-term waste storage facility, has long been controversial in permitting Tokyo to handle quantities of plutonium sufficient to produce nuclear weapons.
Full article at: http://oilprice.com/Alternative-Energy/ ... ustry.html

[eXpat]

I think this article sums up the situation of Japan, now and in the future
Japan down for the Count

Debt Situation before this started
Before Japan experienced it’s worst earthquake since the early part of the 20th century, the Japanese economy wasn’t exactly doing stellar. Once an economy crosses the point where it’s debt is 90% of GDP many consider this the point of no return. Japan is over 200% of GDP and can only sustain itself due to the fact most the debt is held internal to Japan. If they have to go outside the country to source funds for their significant rebuild that 200% Debt to GDP ratio will definitely affect them.

Petrochemical Refining Capacity Reduced
Japan has now taken a blow that may take the Japanese a very long time to recover from and they will definitely never be the same. As I noted in an earlier post (see here) Rick Rule noted that Japan has lost an estimated 29% of their refining capacity. This would be a struggle for any country to recover from. Japan has strategic reserves which they have a sharing agreement with other countries in particular South Korea and New Zealand (see here), but their is no word whether those countries would come to Japan’s aid with any refining capacity, I can’t imagine they have much spare.

Inconsistent Power Grid
On the nuclear front Japan has been more severely affected than other countries might have been. Many have wondered how Tokyo has been affected so severely by the Fukushima reactors being knocked out, why don’t they divert power from other area’s? Well it’s a little known fact that, unlike in North America were all power operates at 60Hz, in Japan the country is split between 60Hz in the south and 50Hz in the North, Tokyo is part of the northern sector. (see here) This makes is very hard for Japan to adapt to a disruption to their power grid. In theory you could step the power up and down between the two area’s but this isn’t trivial when your talking gigawatts. Figures on how much power the northern area around Fukushima was supplying to the country range from 10-20%, combine this will 29% of refining capacity being knocked out to support other power plants and rolling blackouts could continue for some time.

Japanese Manufacturing
It is well known that Japan is very dependent on there exports to sustain their economy. Any food or produce exports will be toast, since everyone will be leary of taking any food or beverage products that originate from Japan. Their manufacturing is like much more severely affected and the true nature of this won’t be know for some time but we are starting to get a sense of the impact.

It should be expected that in order for Japanese manufacturers to stay in the game they will have to move manufacturing offshore in order to continue. The big question is will this manufacturing every be moved back to the mainland or will they head down a US style exporting of manufacturing jobs? ...

Radiation
Add to this the radiation fears and the fact that information is very slow to come out on the situation and one would think it will be very hard to get their manufacturing base and economy back online soon. 3 Mile Island and Chernobyl were understood after a couple days, for better or worse, what the situation was and how it would play out. It is unbelievable that with all Japan’s technology and advancement in robotics they have had to send as many humans into the radiation zone as they have. There is also the conspiracy theories that they aren’t telling all, due to the fact that it is much worse than is generally recognized. One fact that no one in Japan wants to discuss is exactly how many spent fuel rods are in the pools outside the reactors? It is also known that an Israeli company that was contracted for monitoring equipment of these plants has had all access completely cut off. Why would you do this unless you were desparate to control all information about the situation. Seems to support the conspiracy theorists.

One really has to wonder exactly how long Japan will be down for the count. It seems reasonable that Japan will never again be the country it once was, and will be changed in many, as yet, unforeseen ways. This all assumes events aren’t taken to the next level of a chain reaction.

http://goldandsilverlinings.com/?p=410

[Graeme]

Japan at critical tipping point

Japanese trains run to the minute, and the country's businesses pride themselves on energy-efficiency. The Japanese boast of their eco-services for eco-products in eco-cities. Yet they rely primarily on imported fossil fuel and nuclear power, live in energy-wasteful homes, and import 60 percent of their food. That may be changing in the wake of the Fukushima nuclear disaster. Maybe.

Japan is at a crucial tipping point. As an island nation, it offers a microcosmic look at the problems facing the rest of the globe, including peak oil and climate change due to greenhouse gas emissions. And as Japan tips, so may the world.

japantimes

[americandream]

Japan at critical tipping point

Japanese trains run to the minute, and the country's businesses pride themselves on energy-efficiency. The Japanese boast of their eco-services for eco-products in eco-cities. Yet they rely primarily on imported fossil fuel and nuclear power, live in energy-wasteful homes, and import 60 percent of their food. That may be changing in the wake of the Fukushima nuclear disaster. Maybe.

Japan is at a crucial tipping point. As an island nation, it offers a microcosmic look at the problems facing the rest of the globe, including peak oil and climate change due to greenhouse gas emissions. And as Japan tips, so may the world.

japantimes

No "may" about it. You can only get so many karaokes out of one planet of oil/resources. Didn't your mum teach you basic thrift? You'ld better be praying that Star Trek will come to the rescue.

[Graeme]

Renewable Energy Boom About to Start in Japan

Japan's Parliament readies approval of an energy bill that will spark 'explosive growth' in renewable solar and wind

Solar and wind companies, set your sails for Japan! The country is about to pass a landmark bill into law that will see “explosive growth” in both solar and wind energy investment according to Prime Minister Naoto Kan. The bill is designed to reduce Japan’s dependence on nuclear power, which accounts for roughly 30 percent of the country’s energy generation. Japanese lawmakers are readying to sign the bill into law by the end of August.

The bill has been developed and promoted by Prime Minister Kan himself, and seeks not only to move away from nuclear dependence, but also break the energy monopoly held by the country’s 10 major utilities.

The legislation calls for installed renewable energy capacity to rise by at least 20 percent of the country’s total power by the early 2020s.

The bill will require utilities to purchase power from outside providers, such as cooperatives and private companies. The rule aims to promote the use of alternative energy sources, which currently only make up 9 percent of Japan’s total electricity supply.

oilprice

[Graeme]

Japan at critical tipping point

No "may" about it. You can only get so many karaokes out of one planet of oil/resources. Didn't your mum teach you basic thrift? You'ld better be praying that Star Trek will come to the rescue.

Star Trek Themed Park Beams Up Clean Energy

Attention all Trekkies: you may not be able to make the trip to anything other planet in the Federation, but if you can make the trip to the Middle Eastern country of Jordan, you will soon be able to experience a Star Trek theme park attraction powered by renewable energy.

The fact that this $1.5 billion park will be located in Aqaba, on the shores of the Red Sea, may have something to do with the fact that King Abdullah of Jordan (who’s known to have a few bucks handy) was once an extra in an episode of Star Trek: Voyager.

Inhabitat reports that while the attraction — designed by Callison, and built in partnership with Paramount Reaction and Rubicon Group — will not be powered by dilithium crystals, it will feature a variety of renewable energy sources, which will provide 100 percent of its power. (There’s no word yet on exactly what type, but we’re imagining solar power will figure heavily in this spread, and perhaps wind as well.)

ibtimes