But They are Fiscally FUBAR…
- Significant Fiscal Deficits
- Gross Financing Needs Are Remarkable
- Debt/GDP now above 80% in all G7 Countries
- Debt/GDP ratio up significantly in Spain, Greece, Portugal, and Japan
- In most G7 countries short term debt is 20% to 30% of total debt outstanding
and Financial Repression and Domesticization has become rife…
- For Japanese investors JGBs look attractive
- Foreigners own only 5% of JGBs
- Japan: Holders of government debt as % of total outstanding. Foreigners hold 5%
- Institutional investor holdings of government debt
which has lead to a nation (people and banks) that are entirely as one connected to this SNAFU…
- Japanese banks have been increasing their holdings of Japanese government bonds
- Japanese banks: Deposit growth higher than loan growth
- Japanese banks buying JGBs for their surplus deposits
- Japan’s elderly rely mainly on public transfers when they turn 70
