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Politics : President Barack Obama
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To: RetiredNow who wrote (107128)1/8/2012 8:18:56 PM
From: tejek  Read Replies (1) of 149317
 
How on earth is a 300% debt to GDP ratio sustainable?

First I believe the figure is closer to 200%; not 300%. Secondly, its sustainable because the Japanese have a high saving rate and trade surplus:

The combination of low household saving and substantial government dissaving would normally force a country to borrow from the rest of the world. But Japan maintains a current-account surplus and continues to send more than 3% of its GDP abroad, providing more than $175 billion of funds this year for other countries to borrow. This apparent paradox is explained by a combination of high corporate saving and low levels of residential and non-residential fixed investment. In short, Japan’s national savings still exceed its domestic investment, allowing Japan to be a net capital exporter.

The excess of national saving over investment not only permits Japan to be a capital exporter, but also contributes – along with the mild deflation that Japan continues to experience – to the low level of Japanese long-term interest rates. Indeed, despite the large government deficit and the enormous government debt – now close to 200% of GDP – the interest rate on 10-year Japanese government bonds is just 1%, the lowest such rate in the world.

project-syndicate.org

One size does not fit all......esp. when it comes to economics. Its this lack of flexibility and understanding of economics on the part of Rs that's really hurting this country.
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