[lbo-talk] silver lining?

dredmond at efn.org dredmond at efn.org
Fri Apr 24 21:41:00 PDT 2009



> On Apr 24, 2009, at 4:44 PM, SA wrote:
>
> but I just looked up some stats on the Japan case. The only thing that
> kept their economy from suffering a worse depression than the 1930's US
> was the massive deficits they ran. But those deficits increased Japan's
> public debt as a share of GDP by 70 percentage points over 15 years.

It's also worth remembering that Japan never had a problem with private sector debt, which dropped from about 105% of GDP in 1990 to a little above 90% today.

The problem facing Geithner's neoliberal resurrection crew is that US private debt went from 150% of GDP in 1980 to 280% (not a typo, we're talking about a debt mountain almost three times GDP) today. Swapping T-bills for selected bad debts may save a few well-connected banksters, but it won't restart the economy. Instead, it will produce zombie debts. As Lionel put it in Peter Jackson's wickedly funny, anti-Thatcherite zombie thriller "Braindead" (1992, released as "Dead Alive" in the US): "They're not dead exactly, they're just... sort of rotting."

-- DRR



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