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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: steve kammerer who wrote (25604)1/31/2005 2:49:40 PM
From: seventh_son  Read Replies (2) of 110194
 
If I could weigh in here, I can say with certainty that the current Japanese government debt is very close to 150%, although it has been growing at about 7% per year for a long time now. The US government debt is somewhere around 70% of GDP (7.6 trillion debt with an economy of around 11 trillion+ GDP). You would get 350% of GDP if you take all US debt, including consumer and financial debt.

I've wondered a lot about the situation in Japan. It is really hard to compare to the US since everything is opposite. They have a huge current account surplus, while the US has a huge deficit. Their savings rate is high, the US rate is low. Locals account for almost all bond purchases, whereas the US increasingly is dependent on foreigners (actually largely Japan itself) to finance debt. I would be ready to go short the Yen when there is evidence that the ordinary Japanese who put their money in the postal savings system are ready to pull back, or are no longer capable of providing enough funds to finance the massive government deficits. If Japan has to go to the world market to sell large quantities of bonds, with a credit rating that Moody's set lower than Botswana in Africa ( see newsmax.com , they are in big trouble. A massive debt at close to 0% interest is not a big problem. Raise the interest rates a couple percent and it is a major crisis.
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