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Eurozone crisis biggest threat to world economy, Noda tells Davos forum

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Wow! I never imagined old Noda could be so intelligent! So, this is the biggest threat to our inter connected world economy Noda san?? Thanks for the big warning??

-1 ( +0 / -1 )

Wish Japanese PM Noda should have personally attended Davos forum and expressed his concerns there.

-1 ( +0 / -1 )

Wait, we are talking about the same Japan that has a debt to GDP ratio higher than that of Zimbabwe, right?

4 ( +5 / -1 )

Captain Obvious.

1 ( +1 / -0 )

Agree with what he is saying but a) tell us something we dont know b) agree - deflecting attention from Japan much Noda? and c) your triple A credit rating is hard to get back because your economy is crap.

Physicians, heal thyselves!

2 ( +4 / -2 )

Imagine that. The birthplace of the cradle - to - grave welfare state threatens to bring down the world economy.

-1 ( +0 / -1 )

The EU/UK/US/ETC economic problems are largely due to the welfare programs. Like opiates, after a little taste the masses become reliant on the handouts, to the point of demanding more. The politicians, of course, buy votes by promising more "help", feeding the addictions. But the individual welfare is compounded by corporate welfare in the form of various subsidies, easy credit lines(via absurdly low interest loans), and endless bailouts. It's digging a hole with a power shovel, thanks to the brilliance of economists and bankers, led by senseless politicians. This is all financed by the thievery called taxation. What percentage of collected taxes actually goes to the purported objectives? It's like bailing out a rowboat with a pasta strainer. If one donates to a charity, there is a reasonable expectation that most of the donated funds will go to the cause. Not so with governments of men. Most of the folks presently at Davos essentially advocate more of the same failed Keynesian policies. Conducting the same experiment while expecting different results.

-1 ( +2 / -3 )

Noda is right about the scale of the threat, but he does not mention the root cause with even a word: The Euro currency. Until that futile and descructive project by the Euro elites is finally stopped, there is no solution. So the best Noda can do is to stop wasting Japanese tax payer money to fund more stupid Euro support schemes.

3 ( +3 / -0 )

"Noda, speaking via videolink from Tokyo, told the Davos forum in Switzerland.", while the listener was looking down at his smart phone yawning. I highly doubt anyone on the world stage listens to a Japanese PM. I was once at an airport bar in Chicago and the bartender was laughing and said "I can barely keep track of the names of these Japanese guys, and I've been behind this bar for ten years with CNN on with a SONY TV."

0 ( +1 / -1 )

aquaman, yes of course it was the welfare programs, not the banks, that promoted excessive deregulated lending and a huge property bubble. How silly of none of to realise this before you pointed it out. Let me guess, the solution is more deregulation, and pumping more taxpayers' money in to the bonuses of bankers.

0 ( +0 / -0 )

Japan is definitely in a better shape ( relatively ) than Europe given the good habit of Japanese patriotic faith towards the country by keeping a high degree of savings & buying up the bulk of national bonds. The PM is in his own right to point the accusing finger at other countries in trouble with a certain vicious intention of diverting the Japanese public's attention beyond the border -- to rescue himself from dipping support ? As Elbuda Mexicano put it correctly, we are in globalized world whereby economic entities are becoming more than ever interdependent !

1 ( +1 / -0 )

@Weasel

have the financial markets stay focused on the Eurozone, as opposed to actually focusing on Japan's debt-to-GDP ratio (at 2010 it was at a whopping 220% - depending upon who's numbers you use).

The nature of Japanese debt is very different of that of Greece, Italy and Spain. 95% of Japanese debt is an internal debt. Virtually all Government borrowing is funded internally in Japan from domestic savers, with close to nil reliance on international markets. That makes Japan relatively immune to the sovereign debt jitters that have afflicted European economies.

2 ( +2 / -0 )

Wow, such daring controversy. What would the European Union do without Noda-san' s wisdom?

-1 ( +0 / -1 )

So they want to have Japan buy the bonds issued by the European Financial Stability Facility so that money brokers can continue buying and selling CDS (a kind of life insurance) to make more profits without killing the insured nor the insurers. Noda-san is an easy mark in beautiful contrast to the leaders of China and Switzerland.

0 ( +0 / -0 )

If you think that welfare programs have any impact whatsoever, then you are an idiot and know nothing of economics. As a matter fact, increasing benefits, such as unemployment insurance result in larger influxes of spending because rich people and companies do not spend their money, they save it or invest. And Japan is not immune to sovereign debt risk. When you correctly point out that Japan's debt is mostly internal, that just means that all the savings of the Japanese people has been used to finance the waste that has been Japan over the last 35 years. Right now, many rich Japanese are moving their money to Singapore. Why? Because if they leave it here it will disappear when the government can no longer sustain this course of fake economics. The govt has said it will guarantee that banks will not fail here. that is because when they do, the average person here is screwed out of every penny they have ever saved in a bank. This may even wake up the Japanese people to riot and throw the elite out of power.

0 ( +0 / -0 )

japan_cynic:

" aquaman, yes of course it was the welfare programs, not the banks, that promoted excessive deregulated lending and a huge property bubble. "

Contradiction in terms right there. The US property bubble was the result of regulation, which forced banks to give unsafe loans. The Euro housing bubble in the PIIG countries is the result of the artificial Euro currency, which gave the PIIG borrowers artificially low rates.

Neither would have happened in a truly deregulated market. I suggest you look deeper than partyline talking points.

0 ( +0 / -0 )

Actually, the biggest threat, in my mind, to the world economy is the United States of America. That is where the current financial crisis started. If the problem is caused by welfare, it is not caused by giving people welfare payments: it is caused by making welfare payments to unprofitable companies, irresponsible banks, invest companies and mortgage companies. How much of military expenditure is really no more than welfare for weapons manufacturers and others?

The problems caused by irresponsibility caused by a lack of or lack of enforcement of regulation. These problems echoed throughout the world. The Eurozone crisis is one of those echoes.

Paper money is no more than a promise. As such it is worth no more than a promise. "I promise to pay the bearer of this note the sum of ..." And if you demand the sum of ..., you will be given another piece of paper, another promise.

Do you believe the promises of your government? Maybe many Japanese still do. Many still keep their savings in overvalued yen in accounts bearing virtually no interest because they do not have any better ideas. This could change. Unfortunately for us living in Japan, Japan could be the next domino to fall.

2 ( +2 / -0 )

gaijintraveller:

" Actually, the biggest threat, in my mind, to the world economy is the United States of America. "

It is fashionable to blame the US for everything, but the Eurozone disaster is quite separate of the US. The Eurozone disaster would have happened even if the USA did not even exist.

That the debt burden of the US is unmaintainable and creates its own distortions is a given.

0 ( +0 / -0 )

@WilliB

Contradiction in terms right there. The US property bubble was the result of regulation, which forced banks to give unsafe loans. The Euro housing bubble in the PIIG countries is the result of the artificial Euro currency, which gave the PIIG borrowers artificially low rates.

Neither would have happened in a truly deregulated market. I suggest you look deeper than partyline talking points.

I'll bite. How exactly Fannie Mae and Freddie Mac caused the housing bubble (they actually tried to supervise that borrowers can afford their loans) and not by the private mortages (who didn't care for that kind of things)?

Bad mortages were sold to investment bankers, who backed them to CDOs and sold them around the world. It went well as long as people trusted rating agencies that these loans were gold. In the same time leverage limits were deregulated from investment bankers, which made them fall when people stopped buying CDOs.

AIG sold CDSs as insurance against the loss of the value of CDOs, but when it really happened, AIG didn't have the money to pay these CDSs. How exactly that helped to stabilise the market?

It is fashionable to blame the US for everything, but the Eurozone disaster is quite separate of the US. The Eurozone disaster would have happened even if the USA did not even exist.

Actually you have sold incurances worth of 200 billion dollars against eurozone failure. I hope you have the money to pay them this time.

I admit this isn't the place to have serious discussion, but at least put a link where you get your wisdom, so I can try to learn answers to these questions myself.

1 ( +1 / -0 )

Actually, the biggest threat, in my mind, to the world economy is the United States of America

Right. The Euro was forced on Europe by America?

0 ( +2 / -2 )

@unreconstructed

Right. The Euro was forced on Europe by America?

The failure of the eurozone happened, because it got too big too quick. Let's say the biggest forming factor to the world economy is unregulation. I am sure we can agree with that.

1 ( +1 / -0 )

Do you believe the promises of your government? Maybe many Japanese still do.

And according to bond yields, many savvy investors do as well.

1 ( +1 / -0 )

The biggest threat to the world economy are the ppl that have hijacked it. Remove them, remove the problem...

0 ( +0 / -0 )

Hameln:

" I'll bite. How exactly Fannie Mae and Freddie Mac caused the housing bubble "

Google for the "community reinvestment act". The government forced banks to make bad loans, and then bailed them out when the bad loans predictably went bust. Double whammy. The law of unintended consequences. Of course, for the short period of the initial high, everybody was happy. If you were blissfully unaware of that, do some research.

" The failure of the eurozone happened, because it got too big too quick "

No! The failure of the Eurozone happened because it is a fundamentally flawed concept. An artificial common currency for different economies can not work, has never worked, and will never work. (Control question: Do the independent countries of the ex USSR still share the ruble?) The current Eurozone troubles have been predicted by the Eurocritics from the start, and they happen now exactly as predicted already back then, 10 years ago.

-2 ( +0 / -2 )

"Noda also told the gathering that Japan is recovering from last year’s earthquake and tsunami and thanked the international community for its support."

Did he thank them for their support of Japan's whaling program? Isn't that what they spent $30 million on while 95% of the world objects?

I know it's not 100% on topic, but since he's thanking them for their support while spitting in their faces and spending the money, I just thought it a relevant question.

Moderator: Whaling? Incredible, the way you go off topic.

0 ( +0 / -0 )

'Noda also told the gathering that Japan is recovering from last year’s earthquake and tsunami and thanked the international community for its support. He also said that Japan is “very much open for business,” and encouraged foreign companies to invest in the country.'

Anyway, Noda needs to talk about how Japan will address it's own problems before doling out advice as though it knew what it were talking about. What nation in the G8 has the highest debt? What nation is in danger of raising taxes because it cannot cut wasteful spending? etc. The pot calling the kettle black really won't accomplish much.

-1 ( +0 / -1 )

he said. “Once the credibility of a nation is lost there is no way to get it back easily

Wow coming from the head of a very corrupt govt who's politicians lost all credibilty years ago that is a rather larger stone to throw mr noda san.

0 ( +0 / -0 )

I just want to make a note on how this "Housing Bubble " was created in the first place. It was greed also on the rich home buyer that could turn his home over as fast as inflation rose for a big profit. At my stay in San Diego last winter I was told that the average home price had doubled during these times of bad loans only to return to half the value price after the bust of 2008. Every one that had a little money jumped into this short lived scheme of a game.The mortgages were sold, as you well know, to company to company , some times on end until the "Big Bust " of 2008. Then many unlucky home buyers with their timing off had to walk away from their investment and most original home sellers did not lose their profits nor did the original mortgage company.The American tax payer had to bail every one out. This was explained in the documentary " Inside Job ". Thank You for your appreciation for the help received with your countries natural disaster and with your empathy for the " Sendong " disaster in Mindenao.Philippines,Mister Prime Minister Noda

0 ( +0 / -0 )

WilliB>It is fashionable to blame the US for everything, but the Eurozone disaster is quite separate of the US. The Eurozone disaster would have happened even if the USA did not even exist.

It's fashinable to blame the US and it's human to blame anyone other than oneself. Economy and all other the parts of the global network today are so interconnected that it's impossible to say where something ends or starts or what is who's fault. All we know is that all the crisis that happen today, including the economic crisis, are human crisis (even the environmental crisis). The only thing clear is that humanity, we, started it.

The problem is that this way of pushing the problems around not wanting to "get dirty" is in our nature, it's true on every level from individual to nation or union. It's not just the politicians. And it's the only way we know. So what to do? If we can't force the Europeans to get a grip of themselves we're forced to find another way.

Noda points to the problem as Europe's here. The problem is ours, it's common. If every nation (or union ... or perhaps most important - individual) could find a way to turn its attention inward and find the point where it can contribute to the whole, perhaps that would be a start to finding a sollution.

Can we change ourselves? No, humans cannot change themselves. Then what? We have to try. Starting on the individual level with education.

The crisis will bring unemployment to new hights and we'll have plenty of free time. It's also in governments interest. Uprisings and social unrest will escalate when jobs and money run out and both government and financial elite will come to see that it will take more than media-control and deceiving to keep people calm. Rather they will need to educate us, letting us know about the systems in charge of us (such as capitalism and exaggerated consumerism, but also the systems of nature and humanity itself).

In short, Noda and economic summits all miss the point; the era of capitalism and flat egoistic calculations are about to reach a dead end and they still refuse to deal with the true problem. So do we, but we're already ahead of them finding the true sollution!

4 ( +5 / -1 )

Staffan Carle:

" In short, Noda and economic summits all miss the point; the era of capitalism and flat egoistic calculations are about to reach a dead end and they still refuse to deal with the true problem. So do we, but we're already ahead of them finding the true sollution! "

Oh please. It is so simple to complain about the evil of capitalism at every turn, but the fact is nobody has found an alternative that is better. Or can you show any command economy that delivers wealth to its people? Of course not.

Fact is, a market is and will always be the most efficient system to allocate ressources. Wise committees in smoke-filled backrooms can never achieve the same. Fact is also that neither the US housing bubble nor the Euro crisis are the result of "capitalism". In a pure capitalist system, they would never have occurred in the first place, or corrected themselves quickly and brutally.

It is when politicians try to improve the world that they distort the normal market mechanisms and cause such crazy situations as today (e.g. when the force banks to make unsafe loans in the first place and then refuse to let speculating banks go under, both of which you can see today.) The US housing bubble is creation of politics, not of markets. So is the Euro debt crisis. Who gave Greek politicians and speculators the ability to borrow massively at German rates? Politicians did. Markets did not. Who keeps indebting Northern European populations to guarantee PIIG lender banks against their will? "Capitalism" does not, politicians do.

So lets go easy on the soundbytes please.

1 ( +1 / -0 )

WilliB: Ok, you're right about easy on the sound bites. It's easy to oversimplify these things. But what can we do? Even the people that are supposed to know what they're talking about, the politicians and the experts of society, don't know how to solve this thing. It seems to me everyone's working in different directions. Some say that capitalistic system is the problem while others mean that it is the politicians that don't know how to run things ...

Oh please. It is so simple to complain about the evil of capitalism at every turn, but the fact is nobody has found an alternative that is better. Or can you show any command economy that delivers wealth to its people? Of course not.

No, of course not. No one can. I think Einsten said that We can't solve problems by using the same way of thinking as we used to create them. Perhaps wealth is not what we're looking for. Statistics show that people with high income are less happy than people with a normal income. Developing countries seem to be happier than developed countries ... What if we're all off in the wrong direction? What if the crisis is unsolvable?

What I mean is that the politicians and the high economic layer are too immersed in the system to be able to objectively look for a true solution. ...

3 ( +3 / -0 )

Yeah... and the next biggest threat to the world economy are Politicians overall.

0 ( +0 / -0 )

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