The Atlantic has an interesting article that made my eyes bulge out of my head. Why, it was just two years ago that people were sounding the alarm that Japanese debt to GDP had surpassed 200%. Then, last year, it was 230% over GDP.
Now? Here's an article that is talking about the debt nearing 300% of GDP.
From the Atlantic "Will Japan Become Greece?":
Japan's government has borrowed so much and for so long, without having to pay higher interest rates for the privilege, that we've come to assume it can go on for ever. At the same time, this gravity-defying feat may lull us into thinking that public debt can also rise far, far higher in the US without giving rise to serious problems. James Hamilton links to a study that casts doubt on both points.
As is well known, Japan has benefited from low interest rates despite its high debt ratio because nearly all of its public debt is domestically owned, and its savers are a compliant lot. But as Hamilton explains, a demographic transition is getting under way that will thin their ranks. The study by Hoshi and Ito shows that the household savings rate is going to fall, forcing the government--by this time with a debt ratio approaching 300% of GDP--to borrow more heavily from abroad. The pressure would be worse if interest rates start rising in anticipation of the problem.
Remember, what's not sustainable won't be sustained.
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I've said it a hundred times and will keep saying it, "Got gold?"