A Financial Earthquake is Next after Japan’s earthquake and meltdown

japan meltdown

japan meltdown

“First, Japan will have to stop buying US and Euro bonds. Next, they will have to repatriate funds back to Japan for reconstruction. Third, the Japanese will have less money to fund wars started by the US.”

Bill Gross of PIMCO has stopped buying US bonds. If the Japanese have no money to buy these bonds, will the US finally default on its crushing debts? Or, will generous Harper donate Canada to its neighbor, like the way he gives billions to Hamid Karzai?

This disaster is going to cost Americans dearly. Due to the Japan earthquake, the American government will soon have to substantially raise interest rates to keep attracting borrowed foreign cash to run the government.

The U.S. federal government’s debt is over $14 trillion with about two-thirds owed to the people, businesses and foreign governments who bought Treasury bills, notes and bonds, wrote financial writer Kimberly Amadeo, About.com Guide.

Of the total foreign holdings ($4.3 trillion), China owns $907 billion and Japan owns $877 billion – money Japan now needs and is expected to want back right away to rebuild its earthquake devastated economy.
Even before the Japanese 8.9 quake, “the large US federal debt was like driving with the emergency brake on ” and further slowing the U.S. economic recovery.

This highlights a problem with our economic model of debt financing. Japan has a great resource in it’s people, well educated and industrious they are more than capable of focusing on cleaning up after this disaster and moving forward building a prosperous society. Unfortunately the bankers are involved, they finance these ventures but the funny part is they don’t use their own money to finance it. They use our money, and then only a small fraction of our money to create credit out of thin air. They then charge us for this artificial credit by assigning us debt, and a fee (interest) to service that debt.

This economic model seems to work, but it is nothing more than the grandest ponzi scheme of them all. It is made very complex, and ‘legitimized’ by the collusion with world governments so we accept it. The problem is that like all other ponzi schemes it will eventually run it’s course and bankers will have cashed out by gaining title to the hard assets (land, infrastructure, etc.).

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