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Wednesday, November 9, 2011
Italy vs. Japan Debt to GDP Ratio
If Italy's debt loads are unsustainably high, then what should one think about Japan? The country has an economy and population that is shrinking and a national debt that is much larger than Italy's.
I've cherry picked debt numbers that show Japan in the best light. More comprehensive government debt numbers would show Japan's Debt to GDP ratio well above 200%
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External debt is different to internal. Italy the former, Japan the latter. See what Rogoff and Reinhart have to say about financial repression.
ReplyDeleteAt some point excessive debt becomes unsustainable and holders of debt lose portions of their investment. Whether those holders are internal or external is largely irrelevant. Somebody is going to lose money.
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