After a long time of European debt problem it looks to me suddenly all wake up. Few days ago we heard about Chinese buying of
Spain debt and in past the deals with Greece and . Now it is Portugal Japan who wants to help Europe through debt buying. as their minister told that Japanese Govt. plans to buy more then 20% of the bond offering of EFSA.
China, Europe consumes large amount of Japanese export. is the 2nd largest nation after china holding massive foreign reserve of 1.09 trillion. Now they don’t reveal the quantities of different ingredients of their reserve but it is sure EURO must be a big portion of that. As their finance minister said that they will use their EURO reserve for this purpose. That means we are not going to see any effect in currency market for this debt purchase. Japan
What I think, is not it be good if
buys this debt in Yen rather than Euro ! Japan
Stock market in
, continues it’s up move & some people thinks it is overbought. People are not making much new investments in business because it may be not profitable. So they are putting their money in banks. Japan
Now Govt. is suffering all the negative effects of economy. Bank deposits are growing constantly and exceeding loans, as I told that companies and general people are not taking much loans in this circumstances, so who will save them ? The last resort the Govt. Japanese Govt. is taking the loan through Govt. Bond selling. Now what is the aim of this ?
Very simple, if Japanese Govt. don’t sell this bonds economic growth may turn into negative. If economic growth turn into negative things will be worse. Let see
’s GDP growth rate. Japan
Actually in this condition Banks and many Insurance Companies borrow money in low interest and invest in these high Yield Govt. Bonds , this way they are making huge profits. These is the case not only in
Japan but also in USA, and other countries. U.K.
One positive point for
’s outstanding debt is the domestic saving, which is 1.5 times. So Govt. can still borrow until reaching to that limit. Japan
As japans population is aging and their life expectancy is increasing , insurance companies are buying lot of these long-term Govt. Bonds. But we shouldn't forget that one day this luxury will end. Then what ?
If situations go in this way we may see some one has to bail out
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