Quotulatiousness

December 13, 2011

Japan’s even-worse-than-Greek debt situation

Filed under: Economics, Japan — Tags: , , , — Nicholas @ 12:13

By way of Monty’s daily DOOOOOOM post, here’s some disturbing information on Japan’s eyewatering debt situation:

It seems “debt,” “Greece,” “crepe,” or any other words that might relate to the current Euro crisis prompts a flurry of activity on stocks around the world. But if you thought Greece’s and Italy’s debts were high, there exists a country with an even higher debt-to-GDP ratio. Surprisingly, it also has some of the lowest government bond rates in the world. Let’s take a look at this macro mystery.

Japan’s 2011 gross public debt as a percentage of GDP is estimated by the IMF at 234%. Compare this to down-but-not-yet-out Greece’s at 139% and Italy’s at 119%, and the United States’ at 99%. With those numbers, you may ask how Japan hums along while investors berate Europe for their lack of strict budget controls and U.S. politicians wrestle to cut the deficit.

This is because of one main difference: 95% of Japan’s debt is Japanese-owned. Compare this to Greece, which owns 29% of its debt. The Japanese have been happy to fund their government at incredibly low bond rates, currently around 1.1% for a 10-year bond. Why don’t the Japanese invest elsewhere for higher returns? For one, Japan likes to keep its yen in the country. This is due to a natural bias to favor one’s domestic investments (home bias), the strength of the yen, and domestic institutions’ required participation in bond auctions. Also, it’s difficult to find domestic positive returns. The Nikkei, since Japan’s trouble in the early 1990s, has lost about half its value

Gary Johnson has been “hung out to dry” by the RNC

Filed under: Liberty, Media, Politics, USA — Tags: , , , , — Nicholas @ 12:02

A profile of Gary Johnson in the St. Petersburg Times:

The wildly popular former two-term governor of New Mexico, who lost part of his toe to frostbite climbing Mount Everest on a broken leg, has been excluded from 15 of 17 presidential debates.

The 58 year old who was elected governor in a state where Democrats outnumber Republicans 2 to 1 has virtually disappeared from major political polling. The governor who got rid of 1,200 state employees, vetoed 750 bills and left New Mexico with a billion-dollar budget surplus is not Republican enough for the GOP.

“They won’t return my calls,” he said.

That’s why he thinks you’ve probably never heard of Gary Johnson. Even if he grew a handyman business in Albuquerque from scratch to 1,000 employees. Even if he has ridden his bike across mountain ranges. Even if some see him as an electable version of Ron Paul.

“The Republican National Committee has turned their backs on a message that appeals more and more to the American public,” he said.

That message?

Less government is the best government. He wants to cut federal spending by 43 percent. He advocates throwing out the entire U.S. tax system in favor of a 23-percent fair tax on consumption that he says would create thousands of jobs overnight. He wants to abolish the Department of Education and the IRS, and he promises to submit a balanced budget in 2013.

Maybe those are ideas many Republicans can swallow. But his stance on social issues, Johnson knows, rub many the wrong way.

He thinks building a fence between the United States and Mexico is an awful idea; better to have a smooth and easy work-visa program. He supports gay marriage. He is fully in favor of a woman’s right to choose. He wants to legalize marijuana (and yes, he has smoked pot for pleasure and for medical purposes, but quit several years ago) and decriminalize drug use.

Canada’s withdrawal from Kyoto was inevitable from the beginning

I was against the Kyoto agreement from the start, but the government of the day had to be seen to be more “green” than the Americans. John Ibbitson explains:

The Harper government’s decision to withdraw from the Kyoto Protocol tarnishes Canada before the world. Liberal and Conservative incompetence and mendacity are to blame. You and I are to blame. And Lehman Brothers had something to do with it as well.

It isn’t easy for a country to descend, in the space of a single decade, from crusader to pariah, as Canada has done on the environment. But our political leaders were up to the task.

The first, worst mistake occurred at Kyoto itself in 1997, when then prime minister Jean Chrétien told Canadian negotiators to meet or beat the American commitment, whatever it took. The problem was that while the American commitment was ambitious, Bill Clinton never expected the Senate to ratify that commitment, and he was right.

The Liberals found themselves stuck with Draconian targets that, if met, would hobble oil sands production, hammer big industry in Ontario, and send home-heating bills through the roof. Their solution was to study the issue. And study. I remember sitting through an interminable briefing in 2003, in which officials patiently explained how Canada would meet its Kyoto targets. The only problem was that there was this enormous gap, which was to be closed through “future reductions.” It was like having a household budget in which Miscellaneous was bigger than Mortgage.

Given the hammering that British PM David Cameron has been taking in the British press, he should send a bouquet of flowers to Stephen Harper for giving the media a different villain to abuse.

Update: Stephen Gordon says the same thing: inevitable from the beginning.

Notwithstanding economically illiterate attempts to pretend otherwise, higher consumer prices for GHG-emitting goods and services are an essential component of any serious attempt to reduce emissions. Counting on people to reduce GGE emissions out of the goodness of their hearts was the strategy of the Chrétien-Martin Liberal governments, and adopting this policy made Canada’s Kyoto failure inevitable long before Stephen Harper’s Conservatives came to power.

Political parties rarely win when they campaign on a platform that promises to increase the price of fossil fuels — the Progressive Conservative government of Joe Clark lost power in large part because of its proposal to increase the gasoline excise tax by 18 cents a gallon (4 cents a litre).

Update, the second: Oh, it’s okay, apparently we’re not allowed to abandon the “voluntary” agreement:

Remember how this was phrased? “sign it, it’s just voluntary!”

Recall Rio 1992 “Earth Summit” where the meme was “hey, it’s voluntary! … with a negotiating schedule attached”. Apparently, like a Roach Motel, “countries check in but they can’t check out”. This email is from UNFCCC’s list server and note my bolded section below. The arrogance, it burns.

[. . .]

    “I regret that Canada has announced it will withdraw and am surprised over its timing. Whether or not Canada is a Party to the Kyoto Protocol, it has a legal obligation under the Convention to reduce its emissions, and a moral obligation to itself and future generations to lead in the global effort. Industrialized countries whose emissions have risen significantly since 1990, as is the case for Canada, remain in a weaker position to call on developing countries to limit their emissions.”

The Zero Sum Fallacy

Filed under: Economics, Humour — Tags: , , , , — Nicholas @ 09:02

P.J. O’Rourke on the big economic issue that the Occupy folks always get wrong:

The “Occupy This, That and the Other Place” people are right about the sins of the financial system and right about the evil of government supporting and subsidizing this malfeasance. It’s not fair that 1 percent of Americans are rolling in dough while the rest of us are scrimping to pay for our Internet connection so we can go on Groupon.

But the Occupiers are wrong about something much more important. They believe in the Zero Sum Fallacy — the idea that there is a fixed amount of the good things in life. Anything I get, I’m taking from you. If I have too many slices of pizza, you have to eat the Dominos box. The Zero Sum Fallacy is a bad idea — dangerous to economics, politics, and world peace. It means any time we want good things we have to fight with each other to get them. We don’t. We can make more good things. We can make more pizza — or more tofu, windmills and solar panels, if you like.

The Zero Sum Fallacy is just that, a fallacy. Economic history since the Industrial Revolution proves — be the rich however stinking rich — we ordinary people can make more of the good things in life. But we have to make them ourselves, with our knowledge, skills and hard work. Government can’t give us good things. Government doesn’t make things, it just redistributes them. This brings us back to fighting with each other.

NFL week 14 results

Filed under: Football — Tags: — Nicholas @ 08:47

An okay week straight-up, but another terrible set of picks against the spread. I’ve tumbled all the way down to a seven-way tie for 35th spot in the AoSHQ pool, 15 points behind the group leader. I’m starting to suspect that I won’t be able to make up much of that deficit before the end of the regular season . . .

    @Pittsburgh 14 Cleveland 3
    @Cincinnati 19 Houston 20
    @Detroit 34 Minnesota 28
    New Orleans 22 @Tennessee 17
    @Miami 10 Philadelphia 26
    @New York (NYJ) 37 Kansas City 10
    New England 34 @Washington 27
    Atlanta 31 @Carolina 23
    @Jacksonville 41 Tampa Bay 14
    @Baltimore 24 Indianapolis 10
    @Denver 13 Chicago 10
    San Francisco 19 @Arizona 21
    @Green Bay 46 Oakland 16
    @San Diego 37 Buffalo 10
    @Dallas 34 New York (NYG) 37
    @Seattle 30 St. Louis 13

This week: 9-7 (5-11 against the spread)
Season to date 125-83

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