Here's a portion of a transcript taken from a speech by Larry Wilkerson covered by TheRealNews:
LAWRENCE WILKERSON, FMR. STATE DEPT. CHIEF OF STAFF TO COLIN POWELL: This country is the greatest debtor nation in human history now. This country has lived on Japanese largess for 35-plus years. Not the Chinese—that's the preposterous thoughts of the media. Only last year, fiscal year, did the Chinese even come close to the Japanese, and they haven't surpassed them yet, because
let me tell you about another phenomenon in Japan that funds our debt: it's called Japanese housewives. Japanese housewives answer to no central banker, to no finance minister, to no central authority whatsoever, and they have US$14 trillion in assets. Talk about a sovereign wealth fund. Japanese housewives in the culture that they live in learned to use the Internet, learned to get smart about investments in the stockmarket in particular—and I'm talking globally, not just US, but principally the US—and made some really good investment decisions. They now sit on $14 trillion. So when you add that to the $670 billion or so of US debt that the Japanese bought last year, it surpasses the $802 billion the Chinese bought. So the Japanese, in exchange for a public good called "national security", which included a nuclear umbrella—and that meant they didn't have to spend more than 1 percent of their GDP on their military—the Japanese traded us the ability to spend beyond our means to astronomical levels. They gave Ronald Reagan the right to say that he could raise military spending as dramatically as Harry Truman did after NSC-68
in the Korean War pushed it up from about $13 billion to about $54 billion, which sounds little today, but it was a lot then. Ronald Reagan does it and lowers taxes. And they allowed Dick Cheney to say later—and I firmly believe Dick Cheney believes this—that you could lower taxes and raise military spending—that is, fight wars—at the same time with impunity.
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http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=4376#
The damage Japan just suffered is jaw-dropping and it's not over by a long shot. Whole towns and cities will need to be rebuilt and large portions of their power generation infrastructure will also need to be rebuilt. The later will be hideously expensive.
If the Japanese debt is indeed held by private Japanese citizens, there well may be a 'run on the bank'. At the very least they won't be buying Treasury Bonds for a while. And that could mean that, to attract other buyers, the interest rate of US Treasuries may need to go up from zero. An zero interest Treasury rates has been fueling the 'recovery' (read the rise in the stock market.)
Aftershocks indeed.
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