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Japan gov't debt hits record-high Y1,087 tril at end of March

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Great product Abe-san!

(Sarcasm)

1 ( +11 / -10 )

My not yet born great-great-grandchildren say NO THANK you Mr. Abe!

0 ( +10 / -10 )

Who do they owe the debt to?

Well the biggest buyers of Japanese bonds are the Japanese Treasury, the Japan Pension Fund and Japan Post, all of which are owned by the government.

So the Japanese government owes money to the Japanese government.

10 ( +16 / -6 )

yes but who do they owe? Haha tough spot you are in when you owe yourself a lot of money but can't pay yourself back...

14 ( +15 / -1 )

Whenever there is a story like this about Japan's huge debt, there are always a few posters who state that Japan is borrowing from itself, so this is not a problem. But it is a problem, because with a graying population, less children being born, there will come a time, and soon I fear that they won't be able to borrow from themselves. With such huge debts they won't be able to borrow from anyone else, so this is a looming crisis.

2 ( +10 / -8 )

So the Japanese government owes money to the Japanese government.

But let's not forget that the Japanese government does not "make" any money, nor are they a "for-profit" organization.

It's that taxpayers money that is going from the left hand to the right hand, a pie-chart image of who holds the debt of Japan. Foreign countries only hold about 5% of the debt, which is minimal in comparison to other countries in the world.

Japan is not going to go the route of Greece, and it's an image that is a problem, but our grandchildren will have to pay for it with lessened goods and services that the government should be providing

http://www.sify.com/finance/breakdown-of-jgb-holders-imagegallery-others-ldupjRfjgfgsi.html

2 ( +10 / -8 )

Sure, blame it on "child-care support and school subsidies".

How about stop wasting money?

How about reducing the "monthly allowances" of those Government representatives?

How about blaming it on yourself?

5 ( +13 / -8 )

How about reducing the "monthly allowances" of those Government representatives?

Besides over over-bloated bureaucracy , which is a drag on the overall economy, the government is guilty of too many public works projects that in the long run are unnecessary.

Fiscal irresponsibility is the norm here, and the public in their ignorant bliss, allows it to continue, because they feel safe!

9 ( +17 / -8 )

Spot on Yubaru.

Prime Minister Shinzo Abe has effectively given up on his goal of achieving a primary balance surplus by fiscal 2020 due to expansions in child-care support and school subsidies. The government is considering delaying the goal to fiscal 2025 when it unveils its new fiscal restoration plan this summer.

2025 ? Pigs will fly. Might as well stop kicking the can and abandon the target completely. Everyone knows its never gonna happen.

And that twit Aso, on top of all the idiotic comments he makes is the boss of a Ministry that consistently fails to meet its performance targets. Should have been fired long ago but hey TIJ, no one responsible for anything here.

4 ( +11 / -7 )

@Mark: There is a thing called a printing press, so one can always make more money to borrow, and if it all stays internal, then there is no issue.

One of the fundamental flaws of capitalism is the lack of reverse inflation, but Japan is testing that and i think it works.

6 ( +8 / -2 )

What the hell? Record Bebt. The 3rd largest economy we are told again and again can't balance its books? Aso is just a figure head, can't blame him, he has no idea about financial management. His money was gifted to him by slave labour so of course he thinks everybody is a slave. As above grandchildrens are going to get well and truly stiffed. I'm /they are actually lucky we can just leave before the hurt really kicks in.

-4 ( +4 / -8 )

But let's not forget that the Japanese government does not "make" any money...

They surely can print money. Japan, unlike Greece, is a sovereign entity, which can print their own money. That's how they have been able to borrow money without relying on foreign countries.

our grandchildren will have to pay for it...

Not likely. As far as Japan goes, our grandchildren will be doing the same things we are doing - printing and borrowing money. And great grandchildren will be the same and so on until the ratio of retiree to workers become far smaller and manageable.

7 ( +9 / -2 )

I don't exclusively blame Abe government that Japan assisted, helped, many countries for years (especially for neighbor countries remunerations of what Japan caused in ww2, unavoidable matters ) and many others financial supports not payed back, failures of state projects inside and outside Japan, all from government bonds to be increased using Japanese citizen's capital credits. Hmm, it's time to Japan save money and reflect how much politicians spilled milk in those decades. The government must refrain high cost low return before waves of poverty come around the corner.

3 ( +7 / -4 )

Abenomics!

Alexandre Ishii: "I don't exclusively blame Abe government that Japan assisted, helped, many countries for years"

So, you don't blame Abe for going around Asia and Africa and giving trillions in aid then coming home and saying there is no choice but to increase taxes, etc.? No wonder they always think they can get away with it.

2 ( +9 / -7 )

@Markx = I really don't understand how this has gone on for so long now without any major consequences. The only thing i can think of is if the rest of the world wakes up to the scam and no longer buys & instead sells JPY and assets the yen might collapse. Maybe then the game will be up as essential imports to Japan will skyrocket price wise. Having said that most if all other major nations are playing the same game anyway. I wonder how it will end ....

-5 ( +3 / -8 )

Not remotely an issue. Firstly, Japan has no obligation to ever repay these debts, especially with such low borrowing costs.

Second, the entire aim of the government for the past 5 years has been to whittle the debt away through inflation, which is certain to happen.

There’s a reason why even though Japan has such high public debt, it’s currency and government bonds are considered the safest on Earth.

3 ( +7 / -4 )

Well the biggest buyers of Japanese bonds are the Japanese Treasury, the Japan Pension Fund and Japan Post, all of which are owned by the government.

Very wrong, I'm afraid.

The Japanese Ministry of Finance is the entity that issues the bonds - it doesn't hold its own bonds (if it did that wouldn't be considered debt).

The public pension fund too used to be a big holder, but reduced its allocation to bonds in favour of a higher allocation to stocks and foreign assets.

If you check recent statistics, you will find that it is the Bank Of Japan that is the largest holder of bonds, and it has been since 2015. And its percentage of the debt held only continues to increase.

So, the Japanese government, owes money primarily to the Bank of Japan.

This is the same Japanese government that struggles to raise consumption tax even 5% for fear of the various consequences (political and economic), and owns land which it then sells off at steep discounts for political reasons. The same government that spends 97 trillion yen a year, even though record tax revenues of around 60 trillion yen were achieved some 30 or so years ago. To plug that budget deficit would require a much greater hike of consumption tax than what has struggled to be implemented so far, or alternatively sweeping spending cuts, or miracle economic growth.

This is the government that owes money to the Bank of Japan. That government debt is regarded as "assets" to the Bank of Japan. 

The Bank of Japan's "assets" look like trash, given the state of the Japanese government's management of its assets and fiscal policy.

And this is the same Bank of Japan that issues the Japanese currency (except for pesky coins, which the Ministry of Finance issues).

In turn, the trash assets of the Bank of Japan says something similar about those currency liabilities - that is the currency which is widely used by the residents of this country to conduct their economic activities.

Some people say that it doesn't matter because Japan owes money to itself. 

But that is only true to the extent that they have no relations or connections with the Japanese economy. For most people, that isn't the case at all.

Japan has a serious problem with its out of control spending, which is far in excess of the tax revenues it has ever achieved even during the heady bubble era days.

This will probably not blow up today or tomorrow, but it won't go on like this forever.

Japan's central government spending must be cut, cut, cut. If it is cut enough, then people can have a tax cut too. But there is no politician in Nagatacho to tackle this problem. Rather than make for a smaller government and leave the people with more of their own money, their best idea is always to spend even more.

10 ( +12 / -2 )

Japan has no obligation to ever repay these debts, especially with such low borrowing costs.

Ever is a long time. Interest rates were 10% higher 35-40 odd years ago.

I personally think the direction is up from now (and have a fixed interest rate mortgage) but that's me.

8 ( +9 / -1 )

Yubaru, the chart in the link you posted is nice, but unfortunately the data is from 2010. Lots has changed since.

9 ( +10 / -1 )

Numbers lose any meaning when they get this high. The debt will never, ever be repaid.

9 ( +9 / -0 )

If you net off the Japanese governments assets (ownership in previously government owned by privatized corporations like JR (used to be JNR: Japan National Railways 国鉄), then the debt to GDP ration goes to 100%. The government is not as poor as it may look.

-1 ( +2 / -3 )

You need to know macro-economics. Net government debt equals net surplus of private sector (if there is no borrowing from foreign countries). So, you can have only two situations. Big government debt and big surplus in the private sector, or no government debt and no surplus in the private sector. The combination of no government debt and big surplus in the private sector never happens.

If you want to see a big surplus in the private sector, big government debt is nothing but a good news. The government can finance itself by printing money without raising taxes. There is no inflation in sight. The yen may fall against the dollar? That is a good news for the Japanese exporters. I do not see any problem.

1 ( +3 / -2 )

It's long past time that social security and other govt payments to retirees were means tested against accumulated wealth, medical co-payments for 65+s increased, the number of people working in the federal and local bureaucracies reduced, a maximum ceiling for aggregate social security payments imposed, and both corporate subsidies and military/defense spending cut substantially. This country has been financially mismanaged to keep the LDP in power for the past 70 years, and its young people need to demand accountability and change. Their future is inextricably tied to the debt that this government has placed on their shoulders. Nobody in government is even talking about the powderkeg the LDP has put under them. Why isn't the media?

2 ( +3 / -1 )

its simple spend what you can gather.

1 ( +2 / -1 )

Stop useless construction that are to spend all the allocated budget, and giving out Livelihood Protection to unentitled people.

Tax on Pachinko.

Lots should be done but haven't.

Why?

Bribes and currupt connection are ones of the reasons for sure.

2 ( +3 / -1 )

If you think "Oh, the government is eating my precious net worth by issuing debt," you are wrong.

We live in a zero-sum world. If you have any amount of positive net worth, someone else has the same amount of negative net worth. How can everyone be happy? The only way is to accumulate the negative net worth to the person who feels the least pain, which is the government. Japan is doing well.

-1 ( +2 / -3 )

marcelito

Spot on Yubaru.

I'll second that

Prime Minister Shinzo Abe has effectively given up on his goal of achieving a primary balance surplus by fiscal 2020 due to expansions in child-care support and school subsidies. The government is considering delaying the goal to fiscal 2025 when it unveils its new fiscal restoration plan this summer.

2025 ? Pigs will fly. Might as well stop kicking the can and abandon the target completely. Everyone knows its never gonna happen.

And that twit Aso, on top of all the idiotic comments he makes is the boss of a Ministry that consistently fails to meet its performance targets. Should have been fired long ago but hey TIJ, no one responsible for anything here.

Now my friend, its your turn- Spot on marcelito!

fxgai- excellent post too! agree 100%

0 ( +1 / -1 )

Oh and Kazumichi too!

0 ( +0 / -0 )

Pressure upon the Yen ?

0 ( +0 / -0 )

Rather than make for a smaller government and leave the people with more of their own money, their best idea is always to spend even more.

And tell people that they need to have more babies and grow the population.

-2 ( +0 / -2 )

If Japan population does bot snap, nothing will change. Japanese workers are good slaves to pay their taxes.

Japan output (GDP) needs to remain at high level. Will that continue with population falling ?

By the way, the figure of 126 millions Japanese citizens will drop by millions in a few years. Less production, way more costs. Budget headache with no total solution

-2 ( +0 / -2 )

> They surely can print money. Japan, 

When you cherry pick a post you lose the context and screw up the discussion, if you would have added, the rest of the sentence you understand that I was not referring to printing more money but making a profit!

-1 ( +0 / -1 )

Getting companies to pay their taxes in FULL would be a good start.

0 ( +2 / -2 )

If Japan population does bot snap, nothing will change. Japanese workers are good slaves to pay their taxes.

It's almost criminal to have kids for this reason. Hey kids, mom and dad really ran up the debts enjoying those bubble years. Please work hard and live miserably the rest of your life to pay off our debts. Thanks!

3 ( +3 / -0 )

I'm sorry, but this is government debt in name only. In truth it is LDP debt - reflecting failed policies of doling out funds to favorite causes so as to ensure they remain in power, such as construction, agriculture, and fisheries. It was not racked up by social programs, nor by unavoidable causes such as wars. It was simply created by the LDP by overspending.   What is disgraceful, is that they continue to do this today.

0 ( +1 / -1 )

Debt per capita stood at 8.60 million yen based on the country's estimated population of 126.53 million as of April 1.

The debt keeps increasing as the population keeps declining.

Japan's officially bankrupt, the big question is which modern economy defaults on its debt first.

1 ( +2 / -1 )

When you have interest rates at -0.1 and debt at these levels, you better hope and pray that 2008 doesn't swing around again, but the fact is, that is the way the economic cycle works. Every now and again there is a correction, a big bump in the road. Its always been that way and I see little reason for it change, especially given the HUGE private debt levels in both the East and West.

Japan has less room to move than much of the developed world and that's not saying much.

-2 ( +0 / -2 )

Wasn’t reducing this one Abe-sans famous arrows? Clearly it missed like all the others. Que the next headline saying he will make this one of his priorities. Imagine having a job assessment right now on the last six years has it been? It’s not that I dislike the man personally but just have a general dislike of most politicians as they never seem to be ablity to do what they promise.

Abe has given away and pledged away money to everyone outside of Japan and so I am completely unsurprised at this report.

-1 ( +0 / -1 )

Matt HartwellToday  04:17 pm JST

Japan has less room to move than much of the developed world and that's not saying much.

You are totally wrong. Japan is a lot better than the US or EU.

The US has huge amount of external debt. No government has defaulted because of internal debt. Governments that defaulted are all due to external debt. The largest creditor to US is People's Republic of China. There will be a day when the US begs debt forgiveness to China.

EU's fatal problem is EURO. They simply cannot print money. So, government debt crisis occur once in a few years.

1 ( +2 / -1 )

Abenomics works.

-2 ( +0 / -2 )

The largest creditor to US is People's Republic of China. There will be a day when the US begs debt forgiveness to China.

Oh America is in a world of pain as well. The real problem is private debt levels the world over and how much of that is underground as well, in Asia in particular. Private debts have to be paid unless you want bankruptcy and that means less consumption and demand which is why I say, there will be a reckoning when interest rates go up and world governments have fewer and fewer options to stimulate demand. No world demand, no Japanese exports as well.

Chinese ownership of U.S debt is approximately 13%. In fact, Japan owns about the same level and the rest is spread around. There will be no begging forgiveness and if China wants to sell off in a hurry, they do themselves just as much damage.

0 ( +0 / -0 )

Not surprised. The J Govt single-handedly props up the likes of my company by providing them business via ODA infrastructure loans, and I'm sure that's only a small part of what they spend to prop up the wider economy/jobs market.

Japan has no hope of paying off or even reducing its debt until the population stabilizes but that isn't projected to happen for something like another 50 years or so.

1 ( +1 / -0 )

OmachiMay 11  03:00 pm JST

I'm sorry, but this is government debt in name only. In truth it is LDP debt - reflecting failed policies of doling out funds to favorite causes so as to ensure they remain in power, such as construction, agriculture, and fisheries. It was not racked up by social programs, nor by unavoidable causes such as wars. It was simply created by the LDP by overspending.  What is disgraceful, is that they continue to do this today.

They will continue to do it as long as it helps them get elected. The same goes for propping up zombie companies whose owners doubtless contribute generously to LDP members' election campaign funds and quite likely tell their employees who to vote for.

1 ( +1 / -0 )

We live in a zero-sum world. If you have any amount of positive net worth, someone else has the same amount of negative net worth.

Not true.

I own an apple orchard. By the power of the sun it produces apples. Who gets the short straw?

I own a lump of gold, and a fraction of a bitcoin. Who gets the short straw?

The Japanese government could spend within its typical range of tax revenues, and things in the private sector would be just fine.

Many countries have down just fine while decreasing levels of public debt.

We do not need a big central government spending loads of money it doesn’t have in order to survive.

0 ( +1 / -1 )

"Japan has a serious problem with its out of control spending,"

Really? Let us take a look at the Budget for Japan. For Fy 2016 Japan spent 96,721.8 Billion yen. For Fy 2017 Japan spent 97,454.7 an increase of 0.8%.

Let us take look at specific Budget line items:

Public works FY 2016 5,973.7 billion yen FY 5,976.3 +0.0% increase

Education and Science FY 2016 5,358.0 billion FY 2017  5,356.7 0.0% increase.

The rate of inflation for Japan is 1.5%. In real terms, Japanese fiscal spending is not even keeping up with inflation.

-1 ( +1 / -2 )

"The Bank of Japan's "assets" look like trash, "

A bank's assets are trash only if they are nonperforming. Japanese government bonds returned 0.7% ytd and the Japanese government has meet all its interest payments.

0 ( +1 / -1 )

Just in case you forgot:

Japan's net external assets hit record $3 tril as top creditor nation

-1 ( +1 / -2 )

Many countries have down just fine while decreasing levels of public debt.

Not really. The IMF was forced to reverse its position urging austerity on indebted countries, when if found such course of action created alarming downward spirals. The popular model that large fiscal debt puts a drag on economic growth was based on false data and was abandoned a few years ago.

CH3CHO is right. You gotta tackle surpluses if you want to tackle deficits. The private sector has excessive money and thus should be forced to hand much of it back to the public sector, right?

-1 ( +0 / -1 )

Let's see what the "pros" about Japan fiscal position:

S&P raises Japan's credit outlook to positive

Standard & Poor's raised Japan's sovereign credit outlook to "positive" from "stable" on Friday. The rating agency cited healthier economic prospects as the primary reason for the revision.

"Nominal economic growth exceeding 2%, alongside negative effective real interest rates, would allow the sovereign's relative debt burden to stabilize sooner than we had previously expected," S&P said. "Tourism and healthcare spending have helped boost employment and investment," it added.

S&P also pointed out that Japan's favorable economic environment is likely to gradually benefit its fiscal performance for next three to four years.

0 ( +1 / -1 )

econstats, by out of control spending I am not eluding to year on year changes to the out of control spending, but the out of control spending itself.

when was the last year that the government spent less or even approximately the same as tax revenues? I hope your stats go back far enough.

97 trillion spending versus 60 trillion in taxes. This is out of control.

-1 ( +0 / -1 )

"97 trillion spending versus 60 trillion in taxes. This is out of control."

If that is your definition of out of control spending than every G7 country's spending is out of control.

Economist , however, and budget analysts use the rate of inflation and year on year changes to benchmark spending.

1 ( +2 / -1 )

Belonging to a club of spendthrifts is no serious consolation, and Japan is the worst of the bunch.

In contrast, New Zealand is an example of a nation that had its government debt to GDP ratio peak around 25 years ago, and has come down significantly since.

If minnows like New Zealand can figure out basics then you’d think that other larger nations could too. Or then, perhaps smaller nations, with fewer politicians to mess things up, have an advantage in this respect.

-1 ( +0 / -1 )

New Zealand? You cant be serious. Why don't use Lichtenstein as well.

-1 ( +0 / -1 )

Mocking smaller nations doesn’t add anything to what argument you thought you may have had.

Even the US had their debt to gdp trajectory heading downwards in the 1990’s.

-1 ( +0 / -1 )

Some people say that it doesn't matter because Japan owes money to itself. 

But that is only true to the extent that they have no relations or connections with the Japanese economy. For most people, that isn't the case at all.

Japan has a serious problem with its out of control spending, which is far in excess of the tax revenues it has ever achieved even during the heady bubble era days.

This will probably not blow up today or tomorrow, but it won't go on like this forever.

Japan's central government spending must be cut, cut, cut. If it is cut enough, then people can have a tax cut too. But there is no politician in Nagatacho to tackle this problem. Rather than make for a smaller government and leave the people with more of their own money, their best idea is always to spend even more.

No word about the huge savings of the Japanese or the fact that they are the world's largest international creditor.

On cut, cut, cut: American solutions should be reserved for the US of A. The rest of the developed world doesn't need tent camps for those who had a settled life in the past :)

https://www.ft.com/.../e26d36e6-918b-11e7-a9e6-11d2f0ebb7f0

-1 ( +0 / -1 )

Chinese ownership of U.S debt is approximately 13%.

Less, as 1.1 trillion bucks is no 13% of USD 20 trillion US national debt.

0 ( +0 / -0 )

"Mocking smaller nations doesn’t add anything to what argument you thought you may have had."

You totally misses the point. In Economics, when you are making comparison, you have to use similar size economies. Japan is in the G7 so you have to use other G7 countries for the basis of your comparison. You can't compare Japan with a GDP of 5 trillion USD with New Zealand with a GDP of 185 billion USD.

You are comparing apples and oranges.

-1 ( +0 / -1 )

Since you were picky about size, I already pointed out the fact that the US itself managed to put its debt to gdp ratio on a downward trend for a time in the 1990’s, in my prior comment.

So it can be done, even in big economies, and there is no horrid disaster as a result of such sensible governance.

Good governance is good, whether it be in small or large economies.

-1 ( +0 / -1 )

"I already pointed out the fact that the US itself managed to put its debt to gdp ratio on a downward trend for a time in the 1990"

Yes, you are right. It was call the peace dividend. It was a short phase of time and since? Look at the stats:

Year debt to gdp

1/1/1990 53.47866

1/1/1991 58.57598

1/1/1992 61.56997

1/1/1993 63.70064

1/1/1994 64.01391

1/1/1995 64.51921

1/1/1996 64.28276

1/1/1997 62.94913

1/1/1998 61.16164

1/1/1999 58.81365

1/1/2000 55.43177

1/1/2001 54.72513

1/1/2002 56.39537

1/1/2003 58.44066

1/1/2004 59.83298

1/1/2005 60.55546

1/1/2006 61.30518

1/1/2007 62.0832

1/1/2008 67.37384

1/1/2009 81.29553

1/1/2010 89.45682

1/1/2011 94.43535

1/1/2012 98.96988

1/1/2013 100.9598

1/1/2014 102.1443

1/1/2015 101.2314

1/1/2016 104.9633

1/1/2017 103.6958

The trend is upward.

-1 ( +0 / -1 )

 It was a short phase of time

Indeed it was, but if today’s politicians got their act together (like the small nation New Zealanders and Norwegians have) they could achieve similar results again and sustain them, changing the trend.

There is no reason why not.

Good governance in this way is a matter of choice, and prioritization.

0 ( +0 / -0 )

Norway and New Zealand? Norway, main export: oil. New Zealand main export: milk. Please. You would have to be a total idiot not to be able to grow your economy when have tons of natural resources. Look at Venezuela to prove my point.

-1 ( +0 / -1 )

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