Japan Should Scrap U.S. Debt; Dollar May Plummet, Mikuni Says

Japan Should Scrap U.S. Debt; Dollar May Plummet, Mikuni Says

www.bloomberg.com

Dec. 24 (Bloomberg) -- Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession, said Akio Mikuni, president of credit ratings agency Mikuni & Co.

The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes “drastic measures” to help bail out the U.S. economy, Mikuni said. Treasury yields, which are near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere, Mikuni said.

“It’s difficult for the U.S. to borrow its way out of this problem,” Mikuni, 69, said in an interview with Bloomberg Television broadcast today. “Japan can help by extending debt cancellations.”

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Japan isnt the only one here considering this. A large chunk of China debt comes due in 2009 and if they dont continue to buy our debt hyperinflation here we come. People if you have money in savings your dollar will be worthless if this happens. Consider putting your money into other areas because if countries halt buying out debt it will force us to print. Scary indeed this is really looking like Weimar for sure.

www.bloomberg.com
(visit the link for the full news article)

reply to post by mybigunit

Isn't write off different than buy out? I think they mean to forgive the debt...not collect. This would in theory help, but still leaves the situation tenuous to say the least.

Very interesting concept - something has to happen here.

JK

Originally posted by mybigunit
Japan isnt the only one here considering this. A large chunk of China debt comes due in 2009 and if they dont continue to buy our debt hyperinflation here we come. People if you have money in savings your dollar will be worthless if this happens. Consider putting your money into other areas because if countries halt buying out debt it will force us to print. Scary indeed this is really looking like Weimar for sure.

www.bloomberg.com
(visit the link for the full news article)

Yeah, I hear you... that's why I've got 10,000 euros, and only 7,000 US dollars, just in case.

They tried to convince me to not convert more than 25% of my loot, but I didn't go for it.

I might pick up some yen later, but I doubt it.

This is what scares me, Japan or China calling the US debts. I believe it when they said that the value of the US dollars will go down drastically if Japan calls for payment of the US debts. But at least they seem to be thinking of canceling some of these. I am glad that you published this article and I had a chance to read it because I have really been thinking of this issue since the bailout.

Evelyn Guzman
www.debtchallenges.com... (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)

They can extend the debt (ie, roll over) to a later maturity date. So can China, I mean what do they have to lose? But they dont have to buy more (new) debt. "Therein lies the rub." If they quit buying more of our bonds (and the rates are very low) then interest rates will skyrocket. Paradoxically tho the higher rates will attract capital to dollar denominated, interest bearing assets. But if they did decide to sell then the bubble will burst and take us down (would they sacrifice that much money?).

Originally posted by Anonymous ATS
This is what scares me, Japan or China calling the US debts. I believe it when they said that the value of the US dollars will go down drastically if Japan calls for payment of the US debts. But at least they seem to be thinking of canceling some of these. I am glad that you published this article and I had a chance to read it because I have really been thinking of this issue since the bailout.

Evelyn Guzman
www.debtchallenges.com... (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)

Mid 2009 China bills are coming due which means we will have to print a butt load of money to cover the debts with interest. China could buy more but Im not so sure they will be so quick to do this anymore knowing they are getting a weaker dollar in return. I think we will get our AAA rating dropped also which will KILL our dollar.