Monday, August 15, 2011

Japan may sell part of its US bonds

Thinking the unthinkable: Sell U.S. Treasuries

The idea that Japan would ever dump the $900 billion it holds in U.S. Treasuries, the second-largest foreign ownership after China, has long been just that — an idea never seriously entertained...

"The holdings translate to ¥1 million per Japanese taking this risk in shouldering U.S. debt, all without their fully being aware of it," said Kenji Nakanishi, a lawmaker in Your Party, a new opposition party that made significant gains in the last election.
Nakanishi said that Japan shouldn't sell all its holdings at once, but should reduce them by about ¥10 trillion each year, and earmark some of that money for recovery spending in the Tohoku region, which was devastated by the March 11 earthquake and tsunami.
A simple explanation to Washington that the move won't change the U.S.-Japan political and defense alliance should be enough, according to Nakanishi.
It alarms him that the government is trying to raise taxes to fix its deficit and finance the earthquake recovery, a move he fears would further squeeze the economy...
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