Why Japan Is Doomed (and the U.S. and E.U., too): Demographics, Low Savings, Ballooning Debt

Japan muddled through the past 20 years because its vast domestic savings self-funded its stupendous public debts. That dynamic has reversed, and the consequences cannot be pushed aside for much longer.

Japan's debt crisis has been building for a decade. Back in 2001 I wrote an essay on Japan's exploding debt and the dire consequences of what I called Japan's Runaway Debt Train (2001):

Imagine, if you can, an economic Hell in which the U.S. government was borrowing 40% of its annual budget, creating annual deficits of 900 billion dollars a year; where 65% of all tax revenues were gobbled up by interest payments on a mind-boggling $13 trillion public debt; and where there was no conductor in sight to stop this runaway debt train.

Welcome to Japan, where that Hell is reality. (more)