Wednesday, May 18, 2011

Can Japan Cover the Interest Payment?

Zero hedge has so many interesting posts, that I cannot possibly keep up with all of them.  But this one did catch my eye.  
Tyler Durden (a nom de guerre) sited a paper Hoping for the best, preparing for the Japan (scribd pdf) by Dylan Grice
Tyler Durden, Zero Hedge, 11 May 2011
Grice's presentation of an upcoming Japanese hyperinflation, which explains not only why Japan can't afford higher JGB yields, but why its to-date favorable demographics are now looking uglier by the day, and the only outcome for Shirakawa is to finally bite the bullet and beat the Chairsatan at his own game, in the process forcing the Bernank's own hand if he wishes to retain the USD's place at the head of the FX devaluation race.
As he goes on to note, you have a large creditor nation, a bankrupt government, and an aging, shrinking population.

The slide in the presentation that I noticed was the following:
Solid Red is Total Expeditures, Black is Tax Revenues, Dotted Red is Non-discretionary expenditures (Social Security, Education, and Debt Payments
That is not very good at all.  And with so much damage from the earthquake and tsunami expenditures would be expected to go back up again.

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