Aside from the disaster that Japan is experiencing there are other major disasters that that already had occurred in regard with their economy.
They had taken the bait with Bernanke’s advice of printing yens and borrowing more instead of dealing with the debt and making the necessary cuts in the budget. They have had eight stimulus packages in ten years. Their debt stands at 200% of GDP and the credit rating has been cut twice. Japan debt is mostly held by its citizens that now find themselves financially stressed or ruined and will run to the banks to withdraw their saving. In fact Japan just injected out of thin air over 10 trillion yens into the economy to keep the banks from drying out of cash.
It is obvious that when Bernanke advised Japan he was not concerned with Japan but it was all about the Federal Reserve and financing the US Treasury. Japan holds nearly $900 billion in US Treasury bonds. This is a big problem for Bernanke because cash strapped Japan after the earthquake, ensuing tsunami and nuclear disaster may face the need to cash in those bonds leaving Bernanke dry on QE3 before he even announces it.
There are more problems ahead for Bernanke and near the top of the list is the US credit rating which ridiculously still stands at AAA as Moody does not dare cut it to what it properly should be. The Japanese disaster has become a likely nightmare for Bernanke as this financial disaster soon will be sitting on his lap.
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