muses of the moment

June 22, 2012

Charting the global debt

Filed under: Global Debt, Odds 'n ends — totallygroovygirlfriday @ 11:21 am

The free Chart of the Day is kind of interesting. Click here.

This leads to a very interesting case study that is Japan. With a debt to GDP ratio of over 200%, the Japanese 10-year bond yield is a relatively low 0.83%. Why? At the moment, the bond market feels that the Japanese have the ability to repay their debts — in part due to Japan’s perceived ability to raise taxes.

So it’s not just the amount of debt but also convincing your banker that you are good for it.

Groovygirl has a couple of comments regarding Japan and this chart in general. Martin says Japan may to next debt crisis point. This chart illustrates it is all a confidence game.

And how does a country that is importing most of their electricity, raising energy costs on their people, in the middle of an economic decline because of the natural/man-made disasters, raise taxes on their people? Japan also has the same problem as the US: an older population. Hard to get more money from people on a fixed income or unemployed.

Side musing: gg still stands by her call regarding a low in gold at around $1550, stumbling along the bottom ($1550-$1650) until the fall of 2012 when it starts to rise again. As you know, this is what gg is doing, and she buys physical gold (and silver) to hold long-term. She doesn’t trade, so she is not concerned with the volatility. You are responsible for your own investments.

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