Debt, lovely debt

5 Jan

Today I wanted to discuss the financial situation here in Japan. There are a number of commentators who watch the market and economic conditions here but perhaps my favorite person to listen to is Kyle Bass. The other day I watched a Bass video via Zero Hedge and youtube that featured Kyle saying that the sky would fall and it was a question when it would happen.

He mentions a few pertinent facts;
1. Japan pays 10.5 trillion yen a year interest on their national debt
2. Japan takes in 40-42 trillion yen a year in tax revenue
3. Japan pays almost zero interest to finance their debt

It doesn’t take a rocket scientist to figure out what happens next.

Japan already pays 25% of its total annual tax revenue to service its massive quadrillion yen debt. How much more debt can they possibly sustain ? Its even more disturbing when you consider that very few politicians are talking about paying off this debt. The path is very dark ahead…

Prime Minister Shinzo Abe is already on record saying that rural infrastructure projects are needed. Obviously the money has to come from somewhere. Financial minister Taro Aso has also gone on record saying that government spending and financial “easing” must continue if Japan is to achieve its 2% inflation goal and keep its unemployment levels in the 5-6% range.

Stay tuned

My guess is that Mr Abe cannot finish the job but Mr Aso will take over before the years end.


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