Japan eyes reconstruction boom

Monday, August 8th, 2011 | Filed under Business,Business,Earthquakes,Japan,Latest Articles | Posted by

Japan eyes reconstruction boom

Mickey Bozinovich

Marginal Evolution

Japan’s chairman of the Reconstruction Design Council said that the country’s reconstruction plans will spark an economic boom in the country that will repay the reconstruction debt and make the country less reliable on long term debt.

The government is set to spend $250 billion rebuilding the country hit by a quake but it is still unclear where the money will come from. Resolving the funding issue pushes the reconstruction decision into the fall as politicians are squabbling between issuing bonds and hiking taxes.

Japan’s debt is 200% of the GDP and some argue that such a debt load makes Japan a candidate for a financial meltdown.

J. Kyle Bass, head of Dallas-based Hayman Advisors LP, says that shorting Japan is even “more compelling” then shorting the US sub-prime meltdown because the reconstruction spending would push the country over the edge as the government spends half its revenue on servicing the debt.

Bass argues that Japan “will be in the spotlight immediately” after Greece sparks sovereign domino defaults.

Others disagree, citing Japan’s postal system as an institution that is hoarding $15 trillion.

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