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What world country has the highest debt to GDP ratio? Let me throw out some choices. Greece, obviously, Portugal, Italy, and Spain. That's where all the news is anyway.

Actually, it is Japan, and by a long shot. Yes, I am talking about the world's third-largest economy. Here are the top five debtor nations, in terms of debt to GDP. Bear in mind, a level above 90% is considered to hinder future economic growth. That statistic was originated based on research by economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.

Here is the debt-to-GDP ratios of the top six countries in the world. Notice that the United States is number six!

So why is the world not giving Japan the same treatment as the PIGS? Why are its bond yields so low, and why is no one talking about it? First, it does not face the same issue as the European debtors, which is a unified monetary policy, without a unified fiscal policy, so it may manipulate interest rates as much as we have in the United States. Secondly, Japan is still growing in terms of GDP, and debtors usually use the knowledge of a growing economy as indication of good credit. Third, most of Japan's debt is held by the Japanese populace, so many believe that a default would be a "contained explosion."

As human beings, we tend to not solve problems until they, for lack of a better phrase, explode in our faces (i.e. 2011 debt debate, 2008 housing bubble, PIIGS). Regardless, Japan is a fuse just waiting to be ignited. If there is anything that could light this fuse, I believe it would be public attention. If world credit worthiness and growth continues contracting, a single downgrade of Japan's bonds could trigger a cascade of attention and crisis that would dwarf Greece's malaise. The impact would not be so much in the same way as a Spanish default would affect the world; rather, a Japanese default would lower world aggregate demand and production so much (since it is a very large economy) that it would slow growth in other parts of the world.

So, if the world does not care, when will it? Japan has made the soon-to-be-realized mistake of front loading debt. That is, over 85% of its debt comes due in the next 10 years. The greatest bulk is due before 2015, so we should expect public scrutiny of the situation to occur before that time. Yes, it could roll over the debt, but what if there is no one who wants to buy it come 2015? Once again, look back just to 2008 when the mortgage backed commercial paper market went from "AAA" to "junk" in a matter of weeks.

Source: CQCA Business Research

Until then, we'll likely just wait until we reach the crest of another tidal wave of debt. Just let this be your first warning.

Source: Red Debt Flags Across The Pond? No, The Other Pond