S&P lowers Japan credit rating outlook

So why is it that a country has $1 trillion in reserves

I've heard, but not studied first hand, that a lot of those "reserves" are due to creative bookkeeping.

It's not like they send auditors to every country to pour through their records.

Gold, of course, is gold. But "foreign exchange reserves" sound like they could be flim flammed a little bit.

So why is it that a country has $1 trillion in reserves and 115% debt to GNP? Are they getting a better return on their reserves than they're paying out for the debt that they issue? I've always wondered about this but haven't done any research....

Unless the government clears out the bureaucracy it's going to keep going down and down

Well, that's it for Japan then

Unless the government clears out the bureaucracy it's going to keep going down and down

S&P rating seems conservative, it might be further low on Moody's rating scale. Anyway now it is not a matter of time, rather soon that Japan's rating will fall behind other industrialized and non-industrialized countries.

I'm curious. Since 90% of the debt is held by Japanese and J banks, what will happen when the gov't defaults?

Obviously, a lot of people will be upset, and poorer, of course, but I'm no economist, so I just have no idea beyond that.