Vapors? It’s an old expression I suppose, but when a car is just about out of gas, some people say “It’s running on vapors.” The entire world’s economies are running on vapors, but none are as close to being out of gas as is Japan. They will have 5 premiers in the last six years, and the Japanese crisis is virtually unsolvable. Unemployment is horrendous and increasing, and even electronics sales are way off. Why do they still have a AA3 credit rating? Beats me. You thought America’s credit and debts are bad? They’re nothing, compared to Japan’s. The earthquake and tsunami caused tragic radiation, property destruction, electricity shortages, and a thousand other things, but before the earthquake and tsunami, the Japanese were in a world of trouble. In the 1980’s Japan was booming, and everyone thought nothing could stop it. Japan’s economy has come to a earth shattering, screeching halt. Consider:
The Nikkei is down 50%, Commercial real estate down 70%, and Japan’s public debt is 225% of gross domestic product. Japan’s central government debt is one quadrillion yen, and the government debt to revenue is 20 times. Unbelievable, but true. The Obama outfit has averaged 7% deficit spending over the last couple of years, but Japan has been doing it for twenty years. Japan has a 41% corporate tax rate, the highest in the world, compared to America’s 35%, the second highest. This means that industry and jobs don’t go to Japan or the U.S. because taxes are so high.
Young workers in Japan, can only find temporary employment, so there is little or no job security for them. This causes the birth rate for Japanese women to be cut in half from its former rate. This savings rate at the end of the 1990’s, was 5%, and now its 2%. Interest rates in Japan are at a virtual zero, just as in the U.S., to be able to afford the interest rates on the debt. Why would anyone loan at virtually zero interest? Doesn’t matter, because Japan and the U.S. buy their own debts! They print bonds and buy them. How nice! The big difference is that the dollar is the world’s reserve currency, and the yen isn’t. Japan buys 95% of its own debt. It’s the lemonade stand all over again, and it is totally unsustainable.
In earthquake prone Japan, only 18.5% of the Japanese have earthquake insurance, so the insurance companies aren’t going to have to pay out too much from the earthquake-tsunami. Japan’s population is aging quickly, and as they die, the life insurance companies and pension plans for those not dead yet, will have to pay huge amounts of yen, which they don’t have. They’ll have to borrow someplace at higher interest than zero, and this may be the straw that broke the Japanese camel’s back. The vapors will have run out, and the economy will come to a chugging, gasping halt. In Japan and everywhere, gold and silver will still be the shining, unvaporized money.
What about the rest of the world? The 17 euro nations are in deep economic trouble also, and they are arguing about how to get out of it. Germany has a strong economy, as opposed to Ireland, Greece, Spain, Portugal, Italy, and even France doesn’t look too healthy, with failing banks and huge numbers of illegals protesting everything on a seemingly daily basis. Italy has a huge economy, and it is crumbling because of endless deficits and corrupt government. I wouldn’t be surprised if the Germans were secretly printing Deutschmarks, for the day they say absolutely no more loans to failing nations.
Actually, the whole world seems to be running on vapors! Which one will run out of gas first, and take others with it? Time will tell, but America has the Tea Party going for it, which is the first, massive, vote getting, reform movement in the world, and America can lay claim to it. With most of the earth’s economies running literally on vapors, and useless, shallow, credits of various governments, isn’t it wise to get into tangibles? Tangible butter, gasoline, lumber, tires, grass seed, food, oil, coal, steel, glass, books, electronics, and the list of tangibles is endless. All will go up in paper currencies which are backed by thin air, vapor, and worthless promises. Gold and silver are self backed and have been real money for thousands of years. It makes ever so much sense to place one’s surplus assets in gold and silver. They are easily stored, easily sold and bought, require no huge storage space, refrigeration, electricity, and won’t rust or decay. Gold and silver have been real, honest, self backed money for literally thousands of years, and the vapor situation doesn’t apply to them. Protect yourself.
P.S. as I am writing this, gold has quickly recovered from a quick correction, but is still close to a hundred bucks lower than its peak. It’ll go back up, never fear. Ten years ago, gold was $271.50. Five years ago, gold was $561.50. A year ago, gold was $1256.40. Tell you anything?