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Japanese debt tops ¥1 quadrillion

  • Japan's national debt has passed ¥1 quadrillion for the first time, increasing 1.7% on quarter in Q2 to ¥1,008.6T ($10.46T).
  • That's more than twice the size of Japan's GDP, and larger than the combined economies of Germany, France and the U.K.
  • The rise in debt comes as Japan debates whether to increase sales tax to 8% in April from 5% and then to 10% in 2015 in an attempt to shore up its finances. Moody's says that while raising the levy would hamper growth, Japan's ever-increasing debt risks eroding confidence in government bonds.
  • ETFs of interest include JGBT, JGBL, JGBS and JGBD.
Comments (18)
  • divinecomedy
    , contributor
    Comments (466) | Send Message
     
    But nobody cares. This thing can go to 10 quadrillion.
    9 Aug 2013, 05:38 AM Reply Like
  • Jason Burack
    , contributor
    Comments (1764) | Send Message
     
    Not really. It cannot. I believe they are making interest payments on their debt principle of about 20% of annual tax revenues. What happens when 50% of their tax revenues are just going towards interest payments? What about 100%?
    9 Aug 2013, 01:50 PM Reply Like
  • davidshelton
    , contributor
    Comments (320) | Send Message
     
    Rising rates will answer that soon perhaps! Japan's this year's crisis?
    19 Aug 2013, 06:55 PM Reply Like
  • John Cusack's Pancreas
    , contributor
    Comments (41) | Send Message
     
    What's a quadrillion between friends? Clearly such news MUST be bullish for the near zero volume US markets.
    9 Aug 2013, 06:20 AM Reply Like
  • EK1949
    , contributor
    Comments (1583) | Send Message
     
    " Moody's says that while raising the levy would hamper growth, Japan's ever-increasing debt risks eroding confidence in government bonds."

     

    I really like the part where they say the Japanese must commit economic suicide BECAUSE the ever increasing debt blah blah. So kill yourself now now now or "some day" our predictions will come true even though they haven't the last 6,749 times we said the same thing.

     

    If I were a Japanese citizen hearing this I would wonder if it is at all relevant that the people who make these recommendations will never be held responsible for the disasters they create.
    9 Aug 2013, 07:43 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (3903) | Send Message
     
    It will all come crashing down eventually but when?
    9 Aug 2013, 09:28 AM Reply Like
  • thotdoc
    , contributor
    Comments (1729) | Send Message
     
    So, let's see...if we make monthly payments...of say...

     

    OK, so what happens when the debt gets so big that everyone understands that it will never get paid back. The country will just be squeezed, and squeezed and squeezed until...what happens?
    9 Aug 2013, 10:01 AM Reply Like
  • Swisser998
    , contributor
    Comments (133) | Send Message
     
    This is the future for America. Debt has crushed many empires before, and we are no exception.
    9 Aug 2013, 10:22 AM Reply Like
  • g33k
    , contributor
    Comments (12) | Send Message
     
    Disagree - we bought Alaska from Russians for the price of dirt.
    Alaska's worth alone is more than all of US debts.
    And for a limited time, buy Alaska and get Sarah Palin - FREE!!!
    9 Aug 2013, 04:17 PM Reply Like
  • positivethoughts
    , contributor
    Comments (1928) | Send Message
     
    The Japanese would love to buy Alaska, but they have no money to pay us with.
    9 Aug 2013, 04:46 PM Reply Like
  • The Delivery Guy
    , contributor
    Comments (143) | Send Message
     
    thotdoc - It won't get to where the country can't pay it back. It will get to the point where investors begin to question whether the country can pay it back... then they will ddemand greater interest payments to take on the risk... this is where it will start to spiral out of control... see Greece/Cyprus.
    9 Aug 2013, 10:56 AM Reply Like
  • positivethoughts
    , contributor
    Comments (1928) | Send Message
     
    Deficit spending as % of GDP = 9.5%
    Target GDP growth = 4%

     

    Japan's debt is forcasted to continue to increase, even into 2020's. By that time, at current rates, it will be 3 times their GDP. They are planning on having goverment take more from the people - tax increases - and spend more - simulus - in order to solve the problem. Are you kidding me?

     

    Who the hell would buy a Japanese government bond?
    9 Aug 2013, 11:13 AM Reply Like
  • davidshelton
    , contributor
    Comments (320) | Send Message
     
    Whenever that fickle market confidence in Japan collapses as it inevitably must I bet we can count on turmoil all over the world as all those who think "this time is different" get shaken to the core.
    9 Aug 2013, 01:12 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4065) | Send Message
     
    yikes. the dominoes are all lined up to fall. Japan...UK....US.===> Gold backed currency trade system
    China is going bezerk buying up gold. Take notice.
    9 Aug 2013, 02:06 PM Reply Like
  • Kyle Spencer
    , contributor
    Comments (1096) | Send Message
     
    This headline reminds me of something I read in George Bernard Shaw's play Caesar and Cleopatra:

     

    CAESAR (seating himself).
    Now, Pothinus, to business. I am badly in want of money.

     

    BRITANNUS (disapproving of these informal expressions).
    My master would say that there is a lawful debt due to Rome by Egypt, contracted by the King's deceased father to the Triumvirate; and that it is Caesar's duty to his country to require immediate payment.

     

    CAESAR (blandly).
    Ah, I forgot. I have not made my companions known here. Pothinus: this is Britannus, my secretary. He is an islander from the western end of the world, a day's voyage from Gaul. (Britannus bows stiffly.) This gentleman is Rufio, my comrade in arms. (Rufio nods.) Pothinus: I want 1,600 talents.

     

    The courtiers, appalled, murmur loudly, and Theodotus and Achillas appeal mutely to one another against so monstrous a demand.

     

    POTHINUS (aghast).
    Forty million sesterces! Impossible. There is not so much money in the King's treasury.

     

    CAESAR (encouragingly).
    ONLY sixteen hundred talents, Pothinus. Why count it in sesterces? A sestertius is only worth a loaf of bread.

     

    ...I suppose we could calculate the U.S. national debt in pennies, if we really wanted to, and arrive at a much scarier figure than the one we already have. Japan's debt is nearly twice its GDP...but it was nearly twice GDP last year, too, and the year before, and the year before that. Why should investors embrace the Widowmaker trade now simply because the Japanese use such a small unit of account in relation to the USD?
    9 Aug 2013, 03:25 PM Reply Like
  • positivethoughts
    , contributor
    Comments (1928) | Send Message
     
    Japan's GDP to debt ratio is growing by about 10% per year. It is not staying the same. In about 10 years, their debt to gdp ratio will go from about 260% (current), to about 350%. The Japanese do save alot - currently about 15 trillion in U.S. Dollar amounts, but alot of those savings are tied up in debt investments within their own country. So, again, those savings are worth nothing, unless they are cashed out before their government declares insolvency.

     

    If Argentina and Greece can default, why cant a major economy like Japan or America?
    9 Aug 2013, 04:06 PM Reply Like
  • JohnMazz
    , contributor
    Comments (6) | Send Message
     
    Just being an armchair economist I've been trying to figure this out along with the rest of the world. What I have noticed is that every time you think the end of the world is near politicians and central banks figure something out to prevent a collapse so I wonder if the same isn't true for Japan. Maybe the obvious outcome will be that there will be inflation so that all the bond holders will be paid back but in money that is worth far less than the money they lent. Their quality of life will suffer because interest rates will rise dramatically.
    Unless of course they sell 1/2 their country to foreign investors who are willing to pay their debts off. So who has the money to buy Japan ? Maybe they'll have a fire sale.
    11 Aug 2013, 01:40 PM Reply Like
  • june1234
    , contributor
    Comments (2689) | Send Message
     
    Were using quadrillions now, must have run out of trillions.
    12 Aug 2013, 06:55 AM Reply Like
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