Saturday, March 26, 2011

Fears Rise that Japan Could Sell Off US Debt Because of #Earthquake

Yup. Japan, sell away. Don't be such a good "global citizen" and continue to buy/roll over the US Treasury debt. You need money, tons of it. $1 trillion is what I would suspect it would take, or 20% of GDP, if that (depending on the Fukushima I Nuke Plant situation). Well well, you have the US Treasury notes and bonds to the tune of ... $885.9 billion! If you add US agency bonds, I'm sure you get $1 trillion right there at Bank of Japan.

Instead of issuing "recovery" bonds and having the Bank of Japan monetize them, and further going into the debt level that's just impossible to even comprehend, cash out your "savings" that you've accumulated over all these years and put it to good use.

From Washington Times (3/24/2011):

Some lawmakers and market analysts are expressing rising concerns that a demand for capital by earthquake-ravaged Japan could lead it to sell off some of its huge holdings of U.S.-issued debt, leaving the federal government in an even tighter financial pinch.

Others say a major debt sell-off by Tokyo is unlikely, but noted that the mere fact that questions are being raised speaks volumes about the risks involved in relying so heavily on foreign investors to fund U.S. debt.

“This natural disaster in Japan concerns me that it could speed up what’s coming, because they are the second leading buyer of our debt,” Sen. Rand Paul, Kentucky Republican, told The Washington Times. “Small degrees of differences in how much they buy of our debt, I think, can make a big difference in interest rates that we have to pay people to buy our debt.”

Yes, Dr. Paul. Do you think the US can arm-twist Japan into continuing to by the US debt?

The answer is yes, of course. That's how Japan is. Japan will forever be a good "global citizen" and do what's good for the world, even if no one else cares.

I wonder what will happen to their pledge to buy euro debt from PIGS...


CrisisMaven said...

You may also be interested in how to treat radioactively contaminated drinking water:
Maybe someone wants to help with Japanese and other languages?

arevamirpal::laprimavera said...

Thank you for the link. I'm checking the information at your site right now. I sure can translate into Japanese, as many of my Japan earthquake related posts here are based on Japanese news sources that do not necessarily reach here.

Anonymous said...

Selling Yen and buying US treasuries was the primary tool that BoJ used to prevent the Yen from soaring causing exports to collapse. Japan need to keep the value of the yen low or hundreds of thousands to millions of manufacturing jobs would be lost. Back in 1987 Japan started to dump its US treasury holding which kicked off the 20+ year recession.

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