What Does Japan’s Implosion Mean For the Rest of Us?The gist of the argument is that Japan is heading for a “debt trap,” which will unfold as follows: When its pool of domestic savings runs out (as it will in the coming year) the Japanese government will be forced to borrow from foreign investors, who will doubt its ability to pay and demand a higher interest rate. As billions in short term paper roll over at ever-higher rates, interest costs will rise, requiring even more borrowing, which causes investors to demand even higher rates, and so on, until it dawns on the markets that this is a self-reinforcing cycle. Buyers scatter, rates spike, the economy crashes, game over.
Columbus Townhall > Forum > Politics > National > Economy, Budget and Fiscal Issues (Moderators: Peter, CTH Public Relations)
Topic: The Dollar Bubble
