Japan must spell out plans to cut debt-IMF

[Joanne98]

Source: Reuters

WASHINGTON, Jan 27 (Reuters) - The United States and Japan urgently need to spell out plans for cutting their budget deficits before financial markets turn on them and force borrowing costs higher, the IMF warned on Thursday.

The stark warning came as rating agency Standard & Poor's cut Japan's long-term sovereign debt rating for the first time since 2002, and a day after a U.S. agency raised its 2011 budget deficit forecast by 40 percent.

In a report on global debt and deficits, the International Monetary Fund expressed concern that budget cutting in advanced economies with large debts was set to slow, and it pointed to the United States and Japan as laggards.

"In advanced economies where fiscal sustainability has not been a market concern, credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment," the IMF said in its "Fiscal Monitor" report.



Read more: http://www.reuters.com/article/idUSN2716128920110127

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When was the last time we had a IMF "spank the bank" protest?

[xchrom]

1. the IMF should go fuck themselves.

their history to fucking up economies goes back even further that today's banksters and financialists.

in fact they probably cooked up the recipe for them all.

[eleny]

2. I join you in that sentiment

This is just part of the plan to have Americans die quickly and hopefully spend their last ¢ on caskets.

Gotta keep spending even when we're dead.

[AdHocSolver]

3. Best answer Japan could give to the IMF: "Take your b#llsh*t and shove it!"

The IMF is a major player in the Ponzi scheme known as the stock market. The call for so-called "fiscal reform" is really a call for a government to take the money now used for services to its people and make it available for Wall Street to steal. That was what happened in the U.S. The money "saved" by cutting services was used for the bank "bailouts".

Japan's real economy is in better shape than the U.S. economy.

There is nothing wrong with an economic entity running a deficit. Businesses do it all the time. The important consideration is will the economic entity earn enough revenue in the future to pay off the deficit. If it can, than there is no problem.

The U.S. trade deficit is so huge that the U.S. is at risk for default since high unemployment means reduced tax revenue for the government to pay off its loans without borrowing more money to pay back its current debt. A large part of U.S. debt is now owed to foreigners like China and Saudi Arabia and even Japan.

Japan could probably reduce its deficit by recalling its loans to the U.S. That would screw this country and Wall Street far worse than any lowering the debt rating for Japan would. I would suspect that the Japanese are smarter than the crooks who run the IMF give them credit for.

[Name removed]

4. Deleted message

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[bossy22]

5. you need to take a course in econ/finance 101

first off, trade deficit does not equal budget deficit. The two are not connected in any real way. Trade deficit is that you import more than you export, budget deficit is that you spend more than you take in

Also, japan's economy is not in better shape. They have a rapidly aging and shrinking population which will eventually lead to some form of economic contraction or very very slow growth. The U.S. on the other hand has a stable population growth with moderate aging.

also, you cannot just "recall your bonds". no, bonds have a set maturity date, so before that date you have no right to your money- so japan couldn't just demand the money back. Also japan's debt to GDP ratio is 200%, while the U.S. is only at 80%.

U.S. defaulting?- how?- well only by choice. Since we denominate our debt in our own currency and print our own currency- there is no way for us to default unless we consciously choose too. We could always print more money to pay our debt (though inflation would be terrible). Debt is in nominal terms- meaning that if japan invents 1,000,000 is u.s. bonds for a return of 1.2 million- it doesnt mean that 1.2 million has to be worth then what it is when it matures. So essentially we could print 14 trillion dollars today and pay all of our debt off- it wouldnt be worth much but our debt obligations would be paid off

on edit: the stock market isnt a ponzi scheme- but do you know what is? SOCIAL SECURITY

[girl gone mad]

7. You tell someone else to take a course in economics..

then proceed to call Social Security a Ponzi scheme?

That's rich.

[bossy22]

8. it is, but im not saying its a bad thing

the only difference is its run by the government and not fraudulant. a ponzi scheme is gernally a fraudulant operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. its very similar to a pyramid scheme.

the whole point is that social security only works if people pay who do not take from it pay into it. Thats why we are starting to run a deficit in SS

[AdHocSolver]

9. I have a degree in economics. Most of the punditry on economics is b#llsh#t.

How does a trade deficit lead to a budget deficit?

The U.S. currently imports most of the goods purchased in the U.S. This results in high unemployment since those goods were formerly manufactured in the U.S.A. Unemployed people don't pay income taxes, and have little discretionary income to spend, which would pay the wages of other Americans if those other Americans had jobs manufacturing the goods that we buy.

By importing goods rather than manufacturing them in the U.S. using American labor, corporations avoid paying a lot of taxes further increasing government deficits.

The only sure way to reduce the government deficits is to bring manufacturing jobs back to America so that the money spent on purchases will go to other Americans who will then pay taxes, not to other countries such as China.

The way the U.S. currently gets its money to buy goods from China is to sell our technology, our factories, and our government financial instruments to China. Pretty soon we will run out of assets to sell them.

[Odin2005]

10. Econ 101 is RW propaganda.

[Psephos]

12. damned good post n/t

[girl gone mad]

6. Umm.. the IMF is bankrupt.

WTF business do they have scolding Japan??

[Art_from_Ark]

11. I think the main reason they're scolding Japan

is that Japan currently has a center-left government for only the second time since 1955. The previous time there was a center-left government was for a year and a half, 1994-1996, during the Murayama administration. Murayama was basically forced out because he was representing the *cough* Socialist Party of Japan *cough*. The Socialist Party essentially dissolved after that and many of their former members are now members of the current ruling party, the Democratic Party of Japan.