Revelation of the liabilities of Japan

The recently released by the Japanese Ministry of Finance statistics show that as of the end of September, the national debt, including government bonds, borrowings and short-term government bonds amounted to 983.295 trillion yen (U.S. $ 77.3 trillion yuan), a record high. 7.1098 trillion yen compared to the last data released by the end of June, is expected to the end of fiscal 2012, the national debt will total ¥ 1,085,000,000,000,000. According to the Ministry of Internal Affairs and Communications of Japan's total estimated population of 1.2753 million calculations per capita debt of about 7.71 million yen.

Japanese government debt to GDP ratio of over 200%, but the bond market to maintain long-term stability, especially the interest rate is very low (almost no gain), which seems to be in violation of economic common sense. Japanese companies or individuals fought to put money into the bond market, because the national debt is the safest and most liquid assets, even if the investors want to exit the bond market can not find the same capacity and market liquidity can replace. Which also contains a Japanese psychological structure, closed local preferences, but also related to the lack of trust in the international market, because of Japan's investment in overseas assets before the bubble burst almost have encountered a problem. Therefore, the majority of funds remain in the country rather than to the international market. Investment, despite the yen carry activities, mainly the implementation of the overseas institutions. There is no place for the funds ultimately input into the government bond market in Japan, to provide financing for the government deficit.

More peculiar is that government bonds accounted for 25% of the total assets held by the banking system in Japan, Japanese government bonds held by institutions such as central banks, insurance, annuity, plus total about 60 percent, it is like The wall is a market, long-term holding and holdings of government bonds to financial institutions to ensure market stability. MF officials warn the stability of the banking system in Japan last month, the size of the government bonds of their proportion of total assets held by the Japan Bank may be in five years from the current one-quarter rose to third. The Bank of Japan is under tremendous pressure, and being swayed by the Japanese government.

Japan's national debt crisis, its financial sustainability is mainly dependent on the Japanese domestic liquidity and confidence is hard to say. Japanese companies almost never expand investment due to a serious aging problem, but the constant increase in savings, unless large-scale implementation of overseas mergers and acquisitions have may affect the liquidity of the domestic or the current account deficit led to the water dried up. Japanese Finance Ministry this week, a report said Japan's economy shrank by 0.9% in the July-September quarter. Japan's economic growth becomes suspicious, coupled with the strong yen, Japan's corporate revenue and national current account will withstand the pressure, but do not rule out the possibility of continued deterioration. These will let Japan continue to have sufficient liquidity to support financial financing becomes more and more suspicious.

As for government spending cuts, which is almost an impossible task, because of cuts in social spending, especially welfare, politically suicidal behavior, therefore, the Democratic Party and the Liberal Democratic Party program to reach a consensus on raising the consumption tax, but long term, even if the tax increases can only eke out a period of time, can only delay the crisis and will not resolve the crisis, Japanese exceptionalism may be fragile. Japanese financial institutions to hold government bonds so that the size of the debt appears safe expansion and long-term interest rates would depress survive so that the enterprises should be eliminated, thus affecting the industrial restructuring, the plight of the Japanese economy is that the transition has not been successful.