Friday, January 27, 2012

Rocket Science

James Saft, a columnist for Bloomberg Reuters, purportedly one of the world's most influential finance and business wire services, has a interesting column out today. Interesting as in "How interesting it is that this piece got past the editors." (Link)

Saft offers a dire scenario that should give any possible foreign investor in Japan's government bond market pause:
At current very low interest rates - 10-year government bonds yield a paltry 1.0 percent - Japan has ample room for maneuver. Take that rate to 2.0 percent and Japan's annual interest bill doubles.
Call that bold; call it counterintuitive. Call it 1+1=2.

(Many thanks to reader JM for putting the scenario into perspective for me.)


Anonymous said...

If I win a million dollars, I'll be a million dollars richer than I am now.

I hope JM put it in that perspective for you, because that's all you have to know. The debt situation in Japan is far different from the debt situation in the U.S. and nearly polar opposites of Greece, etc. once you break it down into who owns it. Also, the 200%/GDP rate is a gross debt rate.

Here's a better if sentence for you, "if Japanese debt were just like the debt in the PIGS, Japan would be in big trouble right now."

Dog Walking Frisco said...

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Anonymous said...

James Saft writes for Reuters, not Bloomberg, as the link you provide clearly shows. People in glass houses, and all that.