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Japan's post-disaster reconstruction of the global economy 2
 

Relative to the Japanese government's debt levels, the BoJ's balance sheet since the 2008 financial crisis to Japan before the earthquake almost no scale, so the Bank of Japan is fully capable of through the purchase of bonds and other assets to expand their balance sheet.

On the other hand is the reconstruction of the funding requirements or excess global liquidity will have some role in mitigation. Since 1981, global trade has maintained a trade surplus of Japan, account surpluses often exceeding 3% of GDP, net foreign assets of more than 50% of GDP. Japan is the world's second largest foreign exchange reserves, the number of its holdings of U.S. debt continues to increase, according to the U.S. Treasury (Treasury Department) published data, as of the end of 2010, Japan held 882.3 billion U.S. dollars of U.S. Treasury bonds.

Japan, U.S. treasury bonds is the main asset in the form of foreign exchange, reconstruction of the capital back from the perspective of realized net foreign assets is the basic means of returning capital, and liquidity was undoubtedly the most representative of the United States Treasury for the highly liquid financial assets. Therefore, I expect the next period of time, the U.S. Treasury will face the Japanese government, corporate and investor selling pressure.

Smooth issuance of U.S. Treasury bonds and the dollar amount of the guarantee of protection to the output, reduced demand for U.S. Treasury bonds and constraints facing the U.S. dollar selling pressure will be the size of foreign output, coupled with the recent appreciation of the yen weaker demand caused by the yen carry all alleviated to some extent, the status of excess global liquidity.

Japan's reconstruction role in boosting the domestic economy

First, a serious earthquake hit the Japanese economy

Reuters survey on April 4 -4 14 visited some 30 economic analysts, they expect the total domestic production in Japan in the first quarter to be flat in the second quarter, down about 0.6%. This is higher than before the earthquake, a substantial decline analysts expected, when the estimated value of the first and second quarters were 0.5% and 0.4% growth. But most analysts think the outlook has improved in the second half, GDP in the third and fourth quarters, respectively, 0.6% and 1.2%, the survey last month forecast growth is 0.5% in two quarters.

Caused by the earthquake and tsunami disaster, the Japanese exports in March fell more than expected, which is Japan's exports fell 16 ¸öÔÂÀ´Ê×´Î, compared to last year down 2.2%. Because many of the Japanese auto parts northeast of the factory was severely damaged, causing a serious shortage of automobile component, the Japanese auto exports plunged 28% in March. Semiconductor and electronics exports fell 6.9%, the trade surplus to 196.5 billion yen, much lower than the estimated value of 493.6 billion yen.

More importantly, the parts factories resume production damaged the Japanese face enormous difficulties, many manufacturers supply chain disruptions. Expected that with the reconstruction work, the supply chain expected to resume by the end of May, the decline in exports caused by the supply-strand breaks are repaired. But Japan's current power shortage in summer will be limited to electricity, at least before the end of the export recovery is unlikely.

Throughout history, in a major crisis, private consumption demand will decline in the short term, power supply instability may cause companies to defer capital expenditures, but also dragged down consumer confidence, suppression expenditures, thus affecting the economic development of the second half. Exports, consumption and investment will decline in the amount of the common Japanese economy hit rock bottom in the second quarter.

Second, the Japanese government deficit financing needs will continue to expand

Japan's Cabinet approved on March 22 to 4 trillion yen in the scale of the reconstruction budget, which is 60 years of Japan's largest public construction funds. However, as the earthquake and tsunami caused by the loss of about 3,000 billion U.S. dollars, the money is not enough, the Japanese Prime Minister Naoto Kan said in April 25th, Japan will issue new government bonds for the reconstruction of the second batch of supplementary Budget financing.

At present, Japan's debt has reached its 5 trillion (trillion) dollars more than double the economic scale, many people worry about will be the next Japan or Greece. However, I believe, from the perspective of debt holders, mainly for the Greek foreign bank debt and other foreign investors in all, while most of Japanese government bonds held by domestic investors, therefore, although the Japanese government's massive debt, but based on repayment ability and speculative risk measure, the occurrence of Greek crisis is unlikely that we will see a growing debt the Japanese government.

Third, the re-pull the Japanese economy is still not clear the extent

In discussing the economic impact of disasters, people often referred to "broken window theory." "Broken window theory" refers to the 19th century, 50 years, teaching French Bastiat disaster in the economic theory, gives an example: If the house on a piece of glass is broken, which of course will cause economic loss, but in order to repair windows, one must go to install new glass, leading to increased demand for glass, and pulling other industries related to this, and ultimately create new GDP to stimulate the economy.

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