Reply #39: Japan's Future: "It's Going to Be Scary" [View All]

"After two decades of economic doldrums the Japanese economy is ready to hit the wall. And, the impact will likely be felt around the world. John Maudlin, president of Millennium Wave Investments, and George Friedman, CEO of STRATFOR of global-intelligence firm Stratfor, tell Tech Ticker, "be afraid, be very afraid."

http://finance.yahoo.com/tech-ticker/article/297420/Japan%27s-Future-%22It%27s-Going-to-Be-Scary%22?tickers=ewj,^jpn,sne,tm,jpy=x&sec=topStories&pos=8&asset=&ccode=

This is interesting to me on a couple of levels. First, because it explicitly details how Japan's economic crisis is leading to a political upheaval. Japan's economic situation is a little different than ours, but Bernake is pursuing a similar recovery strategy of increasing liquidity and zombie banks. So that implies to me that the US could be in Japan's shoes very soon--and our political upheaval has yet to get started.

Second, Japan has the second largest economy in the world (soon to be eclipsed by China) and is inextricably entwined in the US economy. So what is bad for Japan is generally not good for the US. For example, the political party poised to oust the ruling party for the last 50 years, has stated they will no longer be purchasing bonds, and other financial instruments in dollars. Meaning the value of the dollar will continue to fall and will probably accelerate.