Thursday, January 27, 2011

Japan: Downgrading their Debt














Now let's look at their 10 year bond interest rate:




  1. Who does Japan owe all this money to?

  2. Probably many of the same groups and countries that own US debt. Here is a recent list of top US creditors.

    Hey Junkie, with regards to Japan's dire situation, at what point does their system simply "snap?"

  3. Why is any of this a problem if Japan can simply create their own fiat money out of thin air (or, actually, via a computer keyboard)?

    I'd have thought the real issue would be the availablility of (human) resources due to its ageing population.

  4. Paul,

    I have no idea when Japan's system will buckle under the weight of its own debt; one thing is different when compared to American debt, the citizens of Japan own most of their own debt so at least interest payments on the debt stay within Japan rather than being exported to China et al. That factor alone may keep them afloat longer.

  5. its all a joke created out of thin air is right. we live in a crazy world

  6. paul, have you read greg pytel's blog at all? he has a great take on whats happening.

    thanks for your work.

  7. I am really glad you are using a "net" debt-to-GDP ratio. Unfortunately, I am saddened at how difficult it is to find sub-federal debt ratios by country.

    Take Canada for example: We have somewhere around 35% net debt-to-gdp for our federal government, and it is around double when one includes provinces as well while still excluding local governments. (70%)

    The US has about 70% net debt-to-gdp and around 11% as for the average state debt-to-gdp. (81%)

    Let's not forget local government debt around 7% debt-to-gdp for US municipalities, I do not know this figure for CDN municipalities.

    My point here is that "total government" net debt-to-gdp is a fairer comparison by country; I am not sure what Japan has for provincial & local government debt. But when one looks at all factors, it demonstrates how much we are all in debt.

    One more concluding comment, the province of Ontario has around $200B in government debt. California is around $175B in government debt; but California's economy is TRIPLE the size of Ontario's!!! Scary situation for Ontario!


  8. I didn't realize that, Junkie. I'll keep that in mind. Much the opposite over here as Japan and China own a significant chunk of ours.

  9. I am saddened at how difficult it is to find sub-federal debt ratios by country.

  10. I cannot thank you enough for this article. I have a new site launching in about 2 weeks called Most people have been focusing on trying to short the yen and there are a few ETFs that let investors do just that. I also like the risk reward ratio of being short the Japanese Government Bond market directly? How much downside is there to being short the 10 year JGB with a 1.3% yield?

    Member, Chicago Mercantile Exchange