japan has an election that Britt Gillette was talking about

[Margery]

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The price of rice has soared, the Bank of Japan has problems and they've got an election. Things could change in Japan rather fast in terms of their economy.

Why does this matter? Because it is one of the bigger economies in the world - export and import and they do hold a lot of US debt in the form of bonds. There can be a ripple effect on the world economy which might be a nothing burger or it could be something to keep an eye on.

 

[Margery]

Britt points out they are the 4rth largest economy in the world, their debt to GDP ratio is double that of the US right now, and their debt is largely held inside Japan which sounds great on the surface

but it's held by the Bank of Japan, bought at artificially low interest rates using money they printed. Britt calls it a Ponzi scheme and it's like using credit cards to buy stuff AND pay the credit card bills.

Sooner or later that bus crashes.

When (not if) they fail this will impact the rest of the world because you can't suddenly have the 4rth biggest economy crash and burn without impacting everyone else.

 

[StephanMerm]

Love Britt’s channel ! He has quite the knowledge especially in regards to economic analysis and the cashless system currently in the works.

 

[Margery]

I see the election is in and it is a difficult coalition govt now, meaning that the current PM is in a precarious position.

BBC here has a good explanation of what is happening. Japan election: PM vows to stay on despite bruising election loss but the last paragraphs sum up the problem:
"In any case, a change of leadership within the ruling party would almost certainly unleash political drama and destabilise Japan's government at a pivotal moment in US-Japan trade negotiations.

On Monday, the Tokyo Stock Exchange was closed for a public holiday, but the yen strengthened on global markets against other major currencies as the results appeared to have been expected by investors."

In Japan the current issues are tariffs affecting their export economy, their debt to GDP ratio which is almost double that of the US, the rising cost of living aka inflation which every western country is dealing with post Covid, the pressure of a rapidly aging demographic, and finally the cost of their main dietary staple RICE.

Rice is a touchy topic, because Japan has a price control rice farm system, and rice sold in Japan is supposed to be grown and processed in Japan. In addition in the past farmers were paid not to plant rice, to keep the price up. But due to Covid inflation, the price rose too far up, and the Rice reserves that are kept to pour into the market and lower prices haven't been used. That is generating a lot of anger. The system has been at the breaking point for years but it's a national pride thing and not something easy to change without enraging the voters.

Here is what AP said in a recent article to explain the rice situation: Emergency reserves, high prices, rationing. How did Japan's rice crisis get this far?

All that means is - Japan is just teetering on the edge of a very risky political collapse, and like dominoes falling, it will affect the world's financial markets as Japan is the 5th largest economy in the world- it was the fourth, but recently lost that place to India as of this May, 2 months ago.

When Greece imploded as an economy in 2009 it had been the 30th largest economy in the world in 2008.

This is a far larger economy, and before May of this year, WAS the 4rth largest in the world.