> Their debt to GDP ratio is worse than any of the European countries in crisis and much worse than the US. This is despite having outsourced most of their military to the US.
I read somewhere that most of that debt is owed to local companies though (like Japanese banks, mutual funds etc.), not foreigners, so that should provide them with a small safety cushion.
One thing that I'm curious about and too lazy to search for right now is to know what happened to the proposed privatization of the Japan Post? Some say that it's the largest holder of personal savings worldwide, it would be really interesting to see how that turns out.
Yes - their debt is held locally. And they own a huge chunk of ours. This means that they have less currency risk in the case of deflatiOn. Perversely, the citizens are loaning the govt hundreds of billions to buy loans whose value depreciates as their currency strengthens.
The Japanese deflation was good for consumers and tourists alike. Unfortunately the exchange rates are making it expensive to visit again. Too bad - it's such a fascinating place.
Yes, their debt is currently held locally. However, how long can that last? The Japanese government is trying harder to get ordinary citizens to buy government debt - which suggests that other sources have dried up.
Yes, actually the finance minister himself, Jun Azumi, said that "Japan had reached its limit in relying on debt and said he was aware the global community was watching him in light of the serious debt woes in Europe."
Moreover Debt-servicing is 21.9 trillion yen, a quarter of the planned budget of 90.3 trillion -a mind bending 51% of estimated tax revenue to service debt.
A full 49% of the budget will be financed by bonds. So only half the budget will be financed by taxes!
I read somewhere that most of that debt is owed to local companies though (like Japanese banks, mutual funds etc.), not foreigners, so that should provide them with a small safety cushion.
One thing that I'm curious about and too lazy to search for right now is to know what happened to the proposed privatization of the Japan Post? Some say that it's the largest holder of personal savings worldwide, it would be really interesting to see how that turns out.