BBC reports:
"Japan is at "risk of collapse" under its huge debt mountain, the country's new prime minister has said...
The Japanese government is effectively the only borrower in Japan, and raises all of the money it needs from the savings of its own citizens.
Some 95% of the government's debts are held by Japanese investors, and the government can currently borrow for 30 years at a mere 2% interest rate.
But Mr Scicluna says Japan does have serious medium-term problems related to its ageing population.
As more and more Japanese citizens retire in the next few years, they are likely to start selling their government bonds to pay for their retirements.
This means that Japan will need to start borrowing from the rest of the world, and the government may have a hard time convincing foreign lenders to let it borrow at such a low interest rate...
Full text
Comment: Slowly but certainly, and at an ever higher price, Japan is paying for the exuberance of the 1980s when the Japanese central bank kept interest rates artificially low seemingly justified by low inflation, when in fact the official price index was the result of manipulations of the crudest kind.
No comments:
Post a Comment