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Posted By: Byron Tripp
Monday February 1st, 2010 - 8:49PM
Japan's dirty little secret that threatens US currency rates: Japan's debt situation is thus as quoted by Dylan Grice, Societe Generale
"As Japan's retirees age and run down their wealth, Japan's policymakers will be forced to sell assets, including US Treasuries currently worth $750bn, or Y70 trillion eight months worth of domestic financing.
At nearly 10% of the outstanding US Treasury stock, this might well precipitate other government funding crises."
Written by Vincent Fernando - Courtesy of: www.businessinsider.com
But here's the crisis trigger -- Japan's population decline means less people to buy debt.
"Japan's ability to avoid a funding crunch to date despite its rising indebtedness does not prove that it will not at some point see a funding crunch. It does prove that this can be delayed. How has Japan been able to achieve this delay? Primarily because it has enjoyed a
captive market - not only were domestic savings abundant, but risk-averse Japanese investors were happy to purchase government bonds.
...Except that the game might now be up as the investors who funded the government's serial attempts to revive the economy are now retiring."
