Debt Levels Around the World

[American_Millenium]

US Debt Compared
16 October 2013 Last updated at 19:00 ET

Taken out of context, the numbers are staggering. The US has a total debt pile of almost $17 trillion (£10.6 trillion), which is expected to rise to almost $23tn in the next five years.

But how does that compare with other major economies?

Japan is not far behind, with current debts totalling $11.5tn. By any standards, these are big, big numbers.

And these countries are not alone - almost every major global economy has debts of more than a trillion dollars, according to the International Monetary Fund (IMF).

But context is needed - after all, debt is not necessarily a problem if you have the income to cover it.

That is why the two most common measures used to gauge a nation's indebtedness are:

• total debt, as expressed as a percentage of total economic output (GDP)

• budget deficit, the amount by which a government's expenses exceed its income, expressed as a percentage of GDP

Some governments actually run a surplus - in other words their income exceeds their expenses. Running a surplus is one of the best ways to reduce overall levels of debt.

Looking at debt-to-GDP tells us that total US debt is roughly equivalent to its annual economic output. It is by far the largest economy in the world, and has the largest debt pile.

Japan is the world's third largest economy, but its huge pile of debt is more than double its GDP. The only other country whose debts outstrip economic output is Italy, although a number of others come close - namely the UK, France and Canada.

Even Germany, traditionally seen as fiscally responsible, has a debt-to-GDP ratio of more than 80%.

Much of this debt has been accumulated over the long term, but the numbers have rocketed in recent years as governments have struggled to cope with the 2008 financial crisis and the subsequent recessions that have ravaged almost all major economies. Banking bailouts, economic stimulus measures and falling tax revenues have all forced governments to borrow more.

For example, in 2007, the UK's debt pile was just 44% of GDP compared with 88% last year. This reflects in part the country's large financial sector relative to its overall economy. The US's debt-to-GDP ratio in 2007 was 64%, the same as France and Germany.

By contrast, the debt-to-GDP ratio in China and India, which have seen economic slowdowns but no recession, has not moved significantly over the past five years, nor is it set to deteriorate in the next five. Indeed in the case of China, it is set to fall significantly.

The picture elsewhere is less encouraging. The IMF estimates that Germany aside, those countries with high levels of indebtedness will struggle to reduce debt levels in the coming years.

The UK, where the government has made much of reducing debt levels, will actually see the debt ratio edge towards 100% of GDP.

One reason for this is governments' inability to move from an annual deficit to a surplus. In other words, an inability to live within their means.

The IMF estimates that only Australia and China of the world's 12 largest economies will move into surplus by 2018, while Germany will increase its surplus further. Russia, it thinks, will move from a surplus to a deficit.

However, most major economies are expected to make good progress in reducing their deficits.

http://www.bbc.co.uk/news/world-us-canada-24563189

 

[edwardsnowden]

Laurence Kotlikoff: "The US Fiscal Gap Is $200 Trillion... Our Country Is broke"

2013.09.11


While it is easy and often enjoyable to distract oneself with daily drudgery such as who will bomb whom (if not so enjoyable for those on the receiving end of said bombs), the key word in the sentence is just one: "distract" and as Kyle Bass pointed out correctly, the best, and most "economy-boosting" of all distractions ends up with the proverbial red button being pushed. Sadly, with an economy which Boston University's Larry Kotlikoff defines as "arguably in worst fiscal shape than any other developed country", there is much to be distracted by and is why we correctly predicted in July that the Syrian false flag event is only weeks or months away (turned out to be precisely one month). So for those who have no desire to prove the axiom that ignorance is bliss, or to have their heads stuck in the sand, here is a must read interview between Goldman's Hugo Scott-Gall and the iconoclast economist who, in a vast minority, calls it like it is.

The highlights:

* I estimate the US fiscal gap at US$200 tn, 17 times the reported US$12 tn in official debt in the hands of the public. And this incorporates this year’s tax increases and spending sequestration. What would it take to come up with US$200 tn in present value? The answer is tax hikes or spending cuts, or a combination of the two, amounting to 10 percent of GDP, starting immediately and continuing indefinitely. To do so via spending cuts, alone, would require an immediate and permanent 36% cut in all non-interest spending. To do so via tax hikes, alone, would need an immediate and permanent 55% increase in all federal taxes. Hence, a description of the fiscal adjustments made over the last year could be “too little too late.” In terms of generational accounting, were we to leave our kids and future descendants to cover the entire fiscal gap, they’d face tax rates over their lifetimes around twice as high as those we face.

* The US is arguably in worst fiscal shape than any other developed country. But Greece, the UK, and Japan are close runner ups. As mentioned, our fiscal gap is 10% of the present value of our future GDP. In Germany it’s around 5%, while Canada, Australia and New Zealand are close to zero. Even Italy's long-term fiscal gap is just half of the US’s, yet Italian government bonds sell at a much lower price than US government bonds simply because people don't understand the pension reforms that Italy has rolled out or that Italy has much better control of its healthcare spending.

* Our country is broke. It’s not broke in 50 years or 30 years or 10 years. It’s broke today. Six decades of take as you go has led us to a precipice. That’s why almost the entire economics profession is talking as one at www.theinformact.org. Economists from all political persuasions are collectively sending our government a warning about what is, effectively, a nuclear economic bomb. I’ve been around economics for a long time. I’ve never seen such a strong response to a proposed Congressional bill. This is the profession sending a statement to the President and Congress that’s not unlike the warning physicists sent via Einstein to Roosevelt about the bomb.

And with that, here is the full interview:

Laurence J. Kotlikoff is a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, and President of Economic Security Planning, Inc., a company specializing in financial planning software.



Hugo Scott-Gall: You argue that the official debts that countries report are economically meaningless numbers. Please explain this?

Larry Kotlikoff: Every dollar the government takes in or pays out can be labelled in economically arbitrary ways. For example, the government can call our social security contributions “taxes” or “official borrowing.” And it can call our social security benefits “transfer payments” or “return of principal or principal plus interest.” There is nothing in the math of economic theory that pins down the government’s word choice and each labelling convention will produce a different reported time path of debt, deficits, taxes, and spending. At their heart, these measures are linguistic and convey nothing about a country’s underlying fiscal policy – only about what the government decides to put on and keep off the books.

Uncle Sam is very powerful, but he has only one set of vocal cords. We are all free to label past, present, and projected future government receipts and outlays any way we want, as long as our labelling convention is internally consistent (e.g., if we label government receipts as borrowing, we need to label other outlays as debt service). Consequently, we can produce any past, current, and projected future measure of the government’s debt and other fiscal quantities. With the right past labelling, we can say the current debt to GDP ratio is miles higher than Rogoff-Reinhart’s critical 90 percent. Or, we can argue that the debt to GDP ratio is hugely negative. The Economics labelling problem tells us that what we measure as the size of standard fiscal variables is language- or frame of reference-dependent. This is fundamentally no different from physics. The measurement of time and distance is not uniquely pinned down by the math. What time you report and how you measure the size of physical objects depends on one’s frame of reference (direction and rate of speed through space) or language, if you will.

Here’s another way to see my point. My mother gets checks from the US Treasury all the time. They all look the same except for their amounts. Some are for social security and some are for holding Treasury bonds. But Uncle Sam is discounting the amounts coming on the Treasuries and including that in his official debt measure, while ignoring the amounts coming for social security benefits. Using economically meaningless fiscal indicators to guide fiscal policy is like driving in NY with a map of LA. If you aren’t careful, you’ll drive into the East River.


Hugo Scott-Gall: If conventional fiscal measures are, as you say, content free, what should we measure?

Larry Kotlikoff: Every dynamic mathematical model of the economy that economists write down (and thousands are being constructed each year) includes what’s called the government’s intertemporal budget constraint. This constraint simply requires that the present value of government outlays, no matter how labelled, equals the present value of government receipts, no matter how labelled. In this over-time government balance sheet, the outlays represent the liabilities and the receipts represent the assets. If the value in the present of the liabilities exceeds the value in the present of the receipts, the government’s balance sheet isn’t balanced, with the difference between the liabilities and assets call the fiscal gap. The fiscal gap doesn’t suffer from an economics labelling problem for a simple reason - it puts everything on the books. The fiscal gap is the true measure of a government’s debt. And once one determines its size, one can assess the impact on our children of paying it off if it’s all dumped into their laps. This is part of a companion analysis, called Generational Accounting, which I initiated in the late 80s together with my co-author, UC Berkeley economist Alan Auerbach and my then student, Jagaadesh Gokhale (now at the Cato Institute).


Hugo Scott-Gall: How big is the US fiscal gap and what does US generational accounting show?

Larry Kotlikoff: The CBO will release its 2013 long-term fiscal projection, called the Alternative Fiscal Forecast (an alternative to the Extended Budget Forecast produced for Congress) this Fall. But I estimate the US fiscal gap at US$200 tn, 17 times the reported US$12 tn in official debt in the hands of the public. And this incorporates this year’s tax increases and spending sequestration. What would it take to come up with US$200 tn in present value? The answer is tax hikes or spending cuts, or a combination of the two, amounting to 10 percent of GDP, starting immediately and continuing indefinitely. To do so via spending cuts, alone, would require an immediate and permanent 36% cut in all non-interest spending. To do so via tax hikes, alone, would need an immediate and permanent 55% increase in all federal taxes. Hence, a description of the fiscal adjustments made over the last year could be “too little too late.” In terms of generational accounting, were we to leave our kids and future descendants to cover the entire fiscal gap, they’d face tax rates over their lifetimes around twice as high as those we face.


Hugo Scott-Gall: How do we get better fiscal book keeping?

Larry Kotlikoff: At my encouragement and that of The Can Kicks Back – a non-profit in DC run by twenty-somethings fighting for generational equity, Senators Kaine and Coons – two Democrats – and Senators Thune and Portman – two Republicans – have just co-introduced THE INFORM ACT. The Bill, which I largely drafted in consultation with Alan Auerbach, will require three agencies in the US government (the CBO, the OMB and the GAO) to do fiscal gap analysis as well as generational accounting on an ongoing basis. To date, 12 Nobel Laureates in economics, over 500 of the nation’s other leading economists, George Shultz, the Former Secretary of the Treasury, State and Labor and the OMB Director, and other prominent government officials, and thousands of non-economists have endorsed the bill at www.theinformact.org. I’m hoping everyone in the country will go to the site, endorse the bill, and spread the word.


Hugo Scott-Gall: How do you recommend solving this issue?

Larry Kotlikoff: Measuring our fiscal gap and disclosing its implications for ourselves and our children is just step one in addressing our fiscal issues. What’s really needed is the adoption of radical, but generationally fair reforms to our tax, social security, and healthcare system. Maintaining the status quo is not an option. When a patient needs heart surgery, radical surgery is often the safe option. America needs radical policy surgery. I lay out postcard length reforms of out tax, social security, healthcare, and banking systems at www.thepurpleplans.org. Many of these plans have been endorsed by the economics’ profession’s top economists.

Let me lay out just one of these plans - the Purple Health Plan. The costs of Medicare, Medicaid, the new health exchanges, and employer-paid healthcare (here the costs entail loss of revenue because premiums are exempt from taxes) constitute 60% of the fiscal gap. The Purple Health Plan would eliminate these four systems and start with a clean slate. Under the plan, each US citizen gets a voucher each year, the size of which is determined by his pre-existing medical condition. The voucher is used to purchase, in full, the Basic Health Plan from an insurance provider. The Basic Health Plan’s coverages are established by a panel of doctors subject to the constraint that the costs of all the vouchers never exceeds 10% of GDP. Those who could afford it would be free to buy supplemental policies. No insurer could turn anyone away, but since each voucher is individually rated, insurers would have no incentive to cheery pick. This simple reform, in essence, the healthcare system of Germany, Israel, Holland, Switzerland, and Japan, retains private provision, turns the Basic Health Plan into a commodity with insurance providers competing to attract and retain participants. A very large share – roughly 60% – of America’s fiscal gap can be eliminated via this reform alone. Adopting the other purple plans would eliminate the rest of the fiscal gap without visiting untoward hardship on anyone.


Hugo Scott-Gall: Will society be able to hold current demographic fiscal systems together where young people are heavily taxed...

Larry Kotlikoff: Our country is broke. It’s not broke in 50 years or 30 years or 10 years. It’s broke today. Six decades of take as you go has led us to a precipice. That’s why almost the entire economics profession is talking as one at www.theinformact.org. Economists from all political persuasions are collectively sending our government a warning about what is, effectively, a nuclear economic bomb. I’ve been around economics for a long time. I’ve never seen such a strong response to a proposed Congressional bill. This is the profession sending a statement to the President and Congress that’s not unlike the warning physicists sent via Einstein to Roosevelt about the bomb.


Hugo Scott-Gall: What does all of this mean for overall consumption and savings in the US?

Larry Kotlikoff: Our huge off-the-books fiscal problems were created as a result of the take-as-you-go policies of the post war periods that passed on benefits to older people at the expense of younger people. This systematic intergenerational redistribution produced a massive increase in the absolute and relative consumption of the elderly and a massive decline in our net national saving rate, from 15% in 1950 to 1% now. The ratio of the consumption of a 70-year-old compared to a 35-year-old is about 2.5 times larger today than it was back in 1950. And the reason they’re consuming so much more is that they get the entire set of benefits, from healthcare and social security to tax cuts. National saving finances most domestic investment, so as we’re saving next to nothing means we’re also investing next to nothing. Last year’s net domestic investment rate was 5%, only a third of the 1950 level. And less domestic investment means slower real wage growth, as workers have less capital with which to operate. Finally, since we Americans aren’t saving, we can’t invest in our country. So $4 out of every $5 of investment in the US is now by foreigners. In the late 1970s, Alan Auerbach and I pioneered the development of large-scale computable general equilibrium life-cycle models that we could simulate on a computer. In this and subsequent research, we were able to simulate the impact of take-as-you-go fiscal policy. What we see from these increasingly sophisticated computer models matches exactly what you see in the country, less saving, less investment, less growth, and stagnant wages. While generational policy is not the sole driver of post-war secular economic trends, it’s likely the biggest.


Hugo Scott-Gall: How do other countries compare to the US when you look at their fiscal gaps?

Larry Kotlikoff: The US is arguably in worst fiscal shape than any other developed country. But Greece, the UK, and Japan are close runner ups. As mentioned, our fiscal gap is 10% of the present value of our future GDP. In Germany it’s around 5%, while Canada, Australia and New Zealand are close to zero. Even Italy's long-term fiscal gap is just half of the US’s, yet Italian government bonds sell at a much lower price than US government bonds simply because people don't understand the pension reforms that Italy has rolled out or that Italy has much better control of its healthcare spending.

The case of Norway is also very interesting. I conducted generational accounting with a Norwegian economist named Erling Steigum back in the mid-90s, which proved that while Norway was reporting a huge surplus because of how it was labelling its transactions, in reality the country was spending at far too high a rate. To its credit, the government went ahead and continued carrying out this analysis on a regular basis, and as a result, created a generational trust fund, where some of the North Sea oil revenue is set aside for future generations. This has left them in a much better position today. Chile, another resource-dominated economy, has also got a similar trust fund in effect. The Canadians have also been very careful about their long-term liabilities. So, some countries are acting more responsibly.


Hugo Scott-Gall: Have you considered the impact of fewer jobs, driven by rising automation, in your analysis?

Larry Kotlikoff: Automation and the structural loss of jobs is a very important issue. In fact, Jeff Sachs [i.e. Jeffrey David Sachs] and I have together written about the implications of smart machines, machines that today can substitute almost perfectly, if not more than perfectly for people, and constitute, effectively, competing robots. We’re not far from the day when machines will drive cars too. While that sounds great, the other side of the coin is that younger people are earning less and saving less, and so, they bring much less wealth into old age than previous generations did. Owing to this vicious cycle, these youngsters, who as a group are not the prime owners of capital, aren't going to reap the benefits from this new technology. The beneficiaries are instead going to be a small number of people who are either the inventors, or older people who have the capital to help get the invented technology in place. So, we’re going to see wealth redistributed further, from young workers to older people, with yet direr implications for national saving, domestic investment and growth. Indeed, technological change can, through these general equilibrium feedback effects, end up making all of society worse off in the long run, unless one is careful to redistribute to the young losers from the old winners.


About Laurence Kotlikoff


Laurence Jacob Kotlikoff (born January 30, 1951) is a William Warren FairField Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Research Associate of the National Bureau of Economic Research, a Fellow of the Econometric Society, a former Senior Economist, and President Reagan's Council of Economic Advisers.

Kotlikoff, on his own and with co-authors, has made major contributions in the fields and subfields of generational economics, fiscal policy, computational economics, economic growth, national saving, intra- and intergenerational inequality, sources of wealth accumulation, intergenerational altruism and intrafamily risk sharing, banking, and personal finance. He has also done important work on Social Security, healthcare, tax, and banking reform.

Columns | Laurence Kotlikoff - http://www.kotlikoff.net/

 

[edwardsnowden]

And here's an article from one year ago:

Blink! U.S. Debt Just Grew by $11 Trillion - Bloomberg

By Laurence Kotlikoff & Scott Burns, Aug 9, 2012

Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.

In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion.

The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.

Some question whether “official” and “unofficial” spending commitments can be added together. But calling particular obligations “official” doesn’t make them economically more important. Indeed, the government would sooner renege on Chinese holding U.S. Treasuries than on Americans collecting Social Security, especially because the U.S. can print money and service its bonds with watered-down dollars.

For its part, economic theory sees through labels and views a country’s official debt for what it is -- a linguistic construct devoid of real economic content. In contrast, the fiscal gap is theoretically well-defined and invariant to the choice of labels. Each labeling choice changes the mix of obligations between official and unofficial, but leaves the total unchanged.
[...]

Read further here.

 

[edwardsnowden]

Global Debt, Global Currency » Golem XIV - Thoughts


With the latest installment of the ‘US debt ceiling’ melodrama over, for now, perhaps it’s a good time to ask, what was it all about really?

I know that officially it was supposed to be an edge of your seat, high stakes thriller about how much debt the US government can carry before some disaster strikes, and who has the authority to decide. But I think that behind the lumbering domestic stage show there was actually a different, larger battle, with different stakes, being played out. The debt ceiling debate was, to my mind, something of a proxy war. Real for those caught up in its angry rhetoric, but seen from further away, clearly just a local manifestation of something deeper, and something being directed by different people than those making speeches in the spot-light.

Actually I think the fight over the US debt ceiling is a proxy for who controls the world’s real reserve currency. And that currency is not the dollar. I suggest we would understand events more simply if we recognized that the world’s real reserve currency is DEBT -pure debt. We should not be confused by the fact that debt, globally, is denominated in several forms. Much like the dollar comes in bills of ten and twenty, so the debt currency comes in dollar, euro, yen and yuan. But they are not the currency itself they are just the different bills it comes in.

[...]

Read on here.

 

[edwardsnowden]

To understand how big are the unfunded liabilities and total debt obligations, please check this real time page:

U.S. National Debt Clock : Real Time
http://www.usdebtclock.org/

From "U.S. National Debt Clock", the today's burden per headcount:

-Total DEBT per Citizen is nearly $190,000
-Liability Per Taxpayer is $1.1 MILLION (count in all the Unfunded Liabilities)

 

[American_Millenium]

To understand how big are the unfunded liabilities and total debt obligations, please check this real time page:

U.S. National Debt Clock : Real Time
U.S. National Debt Clock : Real Time

From "U.S. National Debt Clock", the today's burden per headcount:

-Total DEBT per Citizen is nearly $190,000
-Liability Per Taxpayer is $1.1 MILLION (count in all the Unfunded Liabilities)

Are you comparing that to the unfunded liabilities of other countries, or only the public debt of other countries?

To get a good idea as to where the US or any country stands, you have to compare them to other countries.

 

[elis]

So in 10 years it's over it's cool. But don't forget to say that if the crisis hadn't existed we wouldn't have those 10 horrible years.

Don't forget to say that the debt of Japan is not like the debt of USA or Europa, as their debt is owned by their nationals, whereas the debt in the westerners countries are owned by the banks.

 

[Wright]

Japan is in worse shape- 200% of GDP, Germany is not far behind at 80%. But lots of corporations operate in a similar manner - the problem arises when investors lose confidence.

 

[shuttler]

where are the PIIGS?

That is why the usa is creating troubles all across the globe.

Assets in troubled areas will look for safe heavens vis-a-vis the usa; and they are gaining the human capital as well.

 

[shuttler]

Japan is in worse shape- 200% of GDP, Germany is not far behind at 80%. But lots of corporations operate in a similar manner - the problem arises when investors lose confidence.

as far as I can remember the majority of Japanese debts are owned by their own people, retirement funds etc so it is a lesser sovereignty issue than the others but it will hurt their retirees and japanese corporations badly.

 

[tranquilium]

Correct me if I am wrong. I was under the impression that a government running on a little deficit is healthy, as long as the debt to GDP ratio remains the same or gets smaller.

 

[shuttler]

Correct me if I am wrong. I was under the impression that a government running on a little deficit is healthy, as long as the debt to GDP ratio remains the same or gets smaller.

you are okay with this concept roughly
rule of thumb for a healthy "deficit to gdp %" is not to exceed 60%

 

[edwardsnowden]

JAPAN at present has the highest debt to GDP ratio, in addition to this debt problem, they have further these structural problems:

Japan is the major economy with the MOST AGING demography.

And since March 2011, the adversities are exacerbated by the FUKUSHIMA Daiichi Nuclear Power Plants disaster.

BRIEFLY:

- the OLDEST demography will cause unsustainable JP govt bond purchases by the domestic sectors; instead of buying, the aging savers and pension funds will need to sell the bonds to finance their various necessities incl. increasing costs of healthcare needs.

The consequence of such shift of dependence to foreign bond buyers in future will cause disaster, unlike the domestic bond buyers, foreign parties will require HIGHER interests, and it's calculated that a 1% hike in their treasuries interests will cause explosion in debt servicing costs

- dependency ratio gets higher, by 2020 the ratio is predicted to be 69.9 (Factfish Age dependency ratio for Japan)

- as a very homogeneous society Japan can't relieve this demographic problem by allowing the people influx from other nations, they are afraid such immigrants will cause some social tensions or problems in domestic Japan

- Fukushima's ongoing leaking and radiation problems are indeed a time bomb for Japan (Fukushima Diary - EXSKF Coverage of Fukushima I (Daiichi) Nuclear Accident, Nuclear Disaster in Japan and so on)

- Fukushima disaster crippled the many reactors of TEPCO and they will have to shut down further reactors.
Inability to rely on nuke power generation must be offset by huge energy import, causing Japan the record trade deficits since the last few quarters, so Japan is experiencing the TWIN DEFICITS (both deficits in current account balance and government budget balance).

- Fukushima disaster has been causing fatal blows to Japan's economy. The ongoing serious problems there are much understated by the mainstream media (MSM) and put at the bottom of the coverage if any. Of course the official lines from the Japanese govt are everything in Fukushima are under control, no worry, we will fix the problems and by 2020 we will have solved most of the problems if not all, said Shinzo Abe in convincing the IOC to grant host rights to Tokyo.

Read on:

Fukushima radiation levels hit 2-year high — RT News
http://rt.com/news/fukushima-radiation-japan-nuclear-974/

'Fukushima might make 2020 Tokyo Olympics impossible' — RT Op-Edge
http://rt.com/op-edge/fukushima-impossible-tokyo-olympics-2020-895/


- Declining industrial competitiveness or technological edge over other industrial nations
As Japanese electronic industry is losing edge over South Korea's one at the top ends while being crushed by China's one at the lower segments, one should notice that ALL Japanese electronic giants are posting red figures during the last one or two years. In essence, other industrial nations are rapidly narrowing the technological gap with Japan!


Read on following:

Myron Scholes Global Markets Forum: The Coming Crisis in Japan - Kyle Bass (2013-03-06)
http://boards.fool.com/the-coming-crisis-in-japan-kyle-bass-30591026.aspx


The Setting Sun – Japan’s Forgotten Debt Problems
EconoMonitor : EconoMonitor » The Setting Sun

Author: Satyajit Das - January 15th, 2013
In 1979, the publication of Harvard sociologist Ezra Vogel’s international best-selling book Japan as Number 1 signalled the nation’s arrival as an economic power. Today, Japan’s industrial and economic decline is palpable.

Satyajit Das is an internationally respected expert on finance with over 30 years working experience in the industry.


"Japanese Beetle Meet Windshield"
LAND OF THE SETTING SUN « The Burning Platform (2011-03-21)
LAND OF THE SETTING SUN « The Burning Platform


The Government Debt Situation Japan: A Catastrophe Waiting To Happen
Gold Silver Worlds | March 22, 2013
The Government Debt Situation Japan: A Catastrophe Waiting To Happen | Gold Silver Worlds

 

[edwardsnowden]

Thus all the three major economy powers: USA - Europe - Japan are in pretty bad shape.

Regarding which economy has the worst conditions, it's arguable, some economists said that Europe then Japan (or in reverse order) will have outburst first before the USA because the USA has its privileges of printing the World Reserve Currency and as the current bearer of the Great Empire, hence has a bit longer breath.

However, thank to globalization, regardless of which one of this trio goes busted first, it will cause the chain reactions to the others and the rest of the world.

No country will be spared from the resulted effects, what differs only in severity experienced by each economy up to its healthiness, vigor, and readiness.


"The next task for History is to dismantle the untenable structures and institutions put in place by late Modernity, which have been extended now as far as they can go. Our debt-based monetary system will collapse, our unbacked fiats will be worthless. The debts and unmeetable obligations will all default."

Again, pls refer to the Golem's thought-provoking take on the current state of affairs: "the world’s real reserve currency is DEBT -pure debt."

 

[edwardsnowden]

This brief recent article may give some rough impression on how bad the situation is in Europe

Published on Thursday, October 10, 2013 by Common Dreams

Austerity Brings Poverty, Despair, 'Quiet Desperation' to Europe: Report

'We wonder if we as a continent really understand what has hit us'

- Sarah Lazare, staff writer

Austerity policies are bringing poverty, despair, and wretchedness to Europe, spelling out a dismal future of deepening unemployment, inequality, and desperation for countries across the continent, the International Federation of Red Cross and Red Crescent Societies show in a searing 68-page study released exclusively to the Guardian.

(Photo: Equal Times)

"As the economic crisis has planted its roots, millions of Europeans live with insecurity, uncertain about what the future holds," the study reads, according to The Guardian Thursday. "This is one of the worst psychological states of mind for human beings. We see quiet desperation spreading among Europeans, resulting in depression, resignation and loss of hope. Compared to 2009, millions more find themselves queuing for food, unable to buy medicine nor access healthcare. Millions are without a job and many of those who still have work face difficulties to sustain their families due to insufficient wages and skyrocketing prices."

The study—which used a mass survey to map the 28 countries of the EU plus 14 more in the Balkans, Eastern Europe, and central Asia—shows that the crisis touches not only bailed-out countries in the south of Europe and Ireland, but also the so-called successful countries like Germany and "wealthy" countries like Denmark.

Ian Traynor with the Guardian describes the grim picture painted by the study:

Mass unemployment – especially among the young, 120 million Europeans living in or at risk of poverty – increased waves of illegal immigration clashing with rising xenophobia in the host countries, growing risks of social unrest and political instability estimated to be two to three times higher than most other parts of the world, greater levels of insecurity among the traditional middle classes – all combine to make a European future more uncertain than at any time in the postwar era.

The report traces a litany of horrors that include:

• A doubling of suicide rates among women in Greece
• Workers in Slovenia being denied their wages for months
• 350,000 people in France falling beneath poverty levels between 2008 and 2011
• 600,000 workers in Germany not earning enough to live on last year
• 13 percent of the population of Baltic states and Hungary have left their countries due to the grim economic landscape
• Youth unemployment rates ranging between 33 percent and 60 percent in one quarter of countries surveyed

Yet, the authors warn that the long-term effects of austerity and economic decline on the continent are still unknown. "The long-term consequences of this crisis have yet to surface," the report reads. "The problems caused will be felt for decades even if the economy turns for the better in the near future … We wonder if we as a continent really understand what has hit us."

Austerity Brings Poverty, Despair, 'Quiet Desperation' to Europe: Report | Common Dreams