Japan’s Sovereign Debt

With our just completed tax “deal” adding $4 trillion to our national debt by 2022, I thought it might be interesting to look at the debt load of another country that used to be an economic powerhouse, but whose economy has been stagnant while its population ages: Japan.  In no particular order, we see the following:

  • Japanese administrations have accumulated debt worth $14.6 trillion, roughly 230% of GDP.
  • Since the 1990s, administrations have bailed out failed banks and insurance companies.
  • Tax revenues are less than half of expenditures.
  • Interest on Japanese debt has been held to 0.75% by the Bank of Japan, their central bank.
  • Since 2011, the BoJ has fed emergency programs a total of ¥213 trillion ($1.2 trillion).
  • The BoJ Governor, Masaaki Shirakawa, acknowledges
    • At the moment, the effect of our monetary policy in stimulating economic growth is very limited.
    • Fully one-quarter of the government’s overall budget currently goes toward servicing debt.  Were Tokyo forced to pay higher interest rates, it’s mountain of debt would grow even more rapidly.
  • The new Japanese Prime Minister, Shinzo Abe, wants more of the same: a new ¥14.4 trillion ($120 billion) economic stimulus program, this time for the construction sector.  At the same time, Abe wants Shirakawa to pump unlimited cash into the economy.

This graph illustrates:

Any of that look familiar?

The data and graph are via Spiegel Online International.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>