24 November 2011
While all the focus has been on Europe, and to a lesser degree the US
in recent months, two of the other largest debtor nations in the world,
Japan and the UK (including corporate and bank debt), have been under
the market’s radar.
This will change soon and will likely lead to the next phase of the
global financial crisis. The fact that we have a global debt crisis
which will almost inevitably lead to an international monetary crisis is
as of yet not acknowledged or realized by the markets and the media.
Today, the IMF warned in a new report that market concerns over
fiscal sustainability could trigger a “sudden spike” in Japanese
government bond yields that could “quickly” render the nation’s debt
unsustainable as well as shake the global economy.
Japan’s public liabilities amount to roughly twice annual economic
output – a ratio worse than any other industrialized economy, including
turmoil hit Spain or Italy.
Separately, Standard and Poor’s says it’s likely that it will cut Japan’s sovereign rating again, as the government hasn’t made progress in tackling its public debt burden. …
Japan is not the only nation that’s economic sun may soon set. The greatest debtor nation amongst the G8 is the UK with a total debt to GDP ratio of 497% – much, much higher than Italy’s 313%. …
The net result of this entire global debt crisis is likely to be currency devaluations globally and an international monetary crisis.