Looking In the Mirrror and Craving Sushi

www.bloomberg.com/apps/news?pid=20601068&sid=a5682ThUSwY4

I have written pretty extensively on how the US Economy is headed for Japanese style destruction.

tradersutra.blogspot.com/2009/10/more-on-speaking-japanese-without.html

tradersutra.blogspot.com/2009/10/japanese-as-second-language.html

The only reason Japan averted a total nuclear winter was massive government spending to keep the machine alive. That debt has neared 200% of their GDP unfortunately. The US is doing the same thing to keep the machine going.

Japanese debt is absurd at 200% of GDP, we are not nearly there yet, but we are exponentially 10X worse then Japan for the following reasons.

1-Japanese consumers have already gone through some 20 years of deleveraging.
2-Japanese consumers have vast amounts of real assets and savings.
3-Japan's foreign owned debt is only 10% compared to 46% for USA.
4-Half of Japan's government bonds are held by the public sector, government regulations encourage long-term investors like banks, pension funds and insurance companies to buy up the rest.

All of this makes Japanese financial markets much more systemically safer then ours will ever be. You will not see a total debt market collapse in Japan, because the Japanese people are invested directly in it. Its totally the opposite in this country.

USd Treasuries are still considered "Risk Free......"

....But at what price and for how long?

Geithner and Bernanke talk a good game when they discuss deficits and the dollar, but surely they are smart enough to know that once the devil is out of the bag, its impossible to get him back in? We are going to have horrendous deficits for the next decade or so. Its mathematically impossible to reduce the deficit. That is why they continue to print dollars and slowly kill the dollar. The Treasury and Fed wants global imbalances that are so prevalent today to slowly unwind in favor of the USA. The country drastically needs to reduce its trade deficit, a lower dollar helps that. But be careful what you wish for. No country in the history of man has ever gotten wealthy and prosperous by devaluing ones own currency. This cant continue mid-long term.