1. The Japanese bubble already burst in the late 80s and 90s. They are in stagnation ever since, they are not getting worse or better. Meanwhile, Japan's debt is internal, held by japanese citizens, japanese investment firms etc..
2.The European countries debt is also not really that severe or dangerous since it is backed by the ECB and the various mechanisms established during the 2010s crisis and then the pandemic. Even the greek debt is not that bad.
The percentage of greek debt to gdp is that high because the gdp has shrank around 35% in the previous 12 years so it does not reflect the debt in absolute numbers, greece btw has a positive primary surplus since around 2012 i think. Also, the current government has changed many of the previous administrations' policies (especially the dreadful 4 years of the previous radical leftist government which caused the disaster of 2015) so the economy is bound to bounce back sooner rather than later (greece is now one of the fastest recovering countries in the EU after the pandemic). They also replace previous debt and with new bonds at much lower rates (the 10 year bonds where above 6% not even 5 years ago, now they are around 1% if i remember correctly).
3. If you really want to look where the next big debt bubble that will destroy the world economy is, look at china, not at the central governmental level but the local governments. It is there where they bury their debt so that it doesn't show as central government debt, and it has been in the trillions and growing uncontrollably for nearly a decade.
Japan is using a Banking "slight of hand" consolidating National Debt. Selling Bonds to it's National Bank. These National Banks will never cash in the Bonds. Effectively paying off the National Debt.
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QuoteTOKYO, April 28 (Reuters) - The Bank of Japan maintained its massive stimulus on Thursday and pledged to continue buying unlimited amounts of 10-year government bonds to defend its implicit 0.25% cap, signalling its resolve to focus on supporting a fragile economy.
1. The Japanese bubble already burst in the late 80s and 90s. They are in stagnation ever since, they are not getting worse or better. Meanwhile, Japan's debt is internal, held by japanese citizens, japanese investment firms etc..
2.The European countries debt is also not really that severe or dangerous since it is backed by the ECB and the various mechanisms established during the 2010s crisis and then the pandemic. Even the greek debt is not that bad.
The percentage of greek debt to gdp is that high because the gdp has shrank around 35% in the previous 12 years so it does not reflect the debt in absolute numbers, greece btw has a positive primary surplus since around 2012 i think. Also, the current government has changed many of the previous administrations' policies (especially the dreadful 4 years of the previous radical leftist government which caused the disaster of 2015) so the economy is bound to bounce back sooner rather than later (greece is now one of the fastest recovering countries in the EU after the pandemic). They also replace previous debt and with new bonds at much lower rates (the 10 year bonds where above 6% not even 5 years ago, now they are around 1% if i remember correctly).
3. If you really want to look where the next big debt bubble that will destroy the world economy is, look at china, not at the central governmental level but the local governments. It is there where they bury their debt so that it doesn't show as central government debt, and it has been in the trillions and growing uncontrollably for nearly a decade.
It's funny how you are talking about "the debt is fine if it is held internally" but then go write about the "debt bubble that will destroy the world" in China when their debt is also held internally - primarily by the government and SOEs, not even the public. Don't you see a contradiction there? The external debt of China is small and it is a net creditor, just like Japan.
You are also incorrect about the local government debt - it is counted separately from the central government debt and the total figure is a sum of those two. The lack of transparency in LGFVs is true, however, the estimates have been in the $4-5 trillion range, which even when added to the government debt figure would lead to around 65% of GDP which is not that big.
Inb4 "300%" comes up without mentioning that it stands for the total non-financial debt (non-financial corporate debt + household debt + national debt) and that figure was ~270% in 2020. For instance, the US non-financial debt was 235.5% (non-financial corporate + household debts) + 129% (national debt) = 364.5% in 2020. In fact, many European countries are 300%+ on that metric (Italy 180% + 155.3% = 335.3%, France 296.5% + 115.7% = 412.2%, etc. with likes of Germany 176.9% + 69.7% = 246.6% being the exceptions).
It's funny how you are talking about "the debt is fine if it is held internally" but then go write about the "debt bubble that will destroy the world" in China when their debt is also held internally - primarily by the government and SOEs, not even the public. Don't you see a contradiction there? The external debt of China is small and it is a net creditor, just like Japan.
You are also incorrect about the local government debt - it is counted separately from the central government debt and the total figure is a sum of those two. The lack of transparency in LGFVs is true, however, the estimates have been in the $4-5 trillion range, which even when added to the government debt figure would lead to around 65% of GDP which is not that big.
Inb4 "300%" comes up without mentioning that it stands for the total non-financial debt (non-financial corporate debt + household debt + national debt) and that figure was ~270% in 2020. For instance, the US non-financial debt was 235.5% (non-financial corporate + household debts) + 129% (national debt) = 364.5% in 2020. In fact, many European countries are 300%+ on that metric (Italy 180% + 155.3% = 335.3%, France 296.5% + 115.7% = 412.2%, etc. with likes of Germany 176.9% + 69.7% = 246.6% being the exceptions).
I am curious why do you think the estimates of China local government debt is correct when LGFV figures is hidden in the cloud?
One company -Evergrande- alone has liability of $300 billions.
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It is an estimate by S&P that was made back in 2018 through their research on the hidden debts. Why do you think it is incorrect?
Evergrande is parallel to the point you were trying to make. It is not related to LGFV debts, it is a non-financial corporate debt and yes, that sector contributes the most to the total non-financial debt figure - for example, it was 162% of GDP in 2020. Plus, it is the largest developer with both huge assets and liabilities - the size of their liabilities hardly translates to other companies as most of them are far smaller.
It is an estimate by S&P that was made back in 2018 through their research on the hidden debts. Why do you think it is incorrect?
Evergrande is parallel to the point you were trying to make. It is not related to LGFV debts, it is a non-financial corporate debt and yes, that sector contributes the most to the total non-financial debt figure - for example, it was 162% of GDP in 2020. Plus, it is the largest developer with both huge assets and liabilities - the size of their liabilities hardly translates to other companies as most of them are far smaller.
Figured you thought that correct in the quote to another user up there. Personally I believe estimates on Chinese local government hidden debts by any institute any time would be far from truth.
I think Evergrande and a huge portion of Chinese enterprises in different sectors have been as a matter of fact highly related to the rapidly increasing Chinese local government debts since 2011 to 2013. Most of the companies expanded / operated on more than potentially affordable financial leverage obtaining funds from banks owned by local governments. Blurred LGFV debts allows for China central government to write that off when necessary since mostly domestic. Evergrande is only tip of the ice burg.
Figured you thought that correct in the quote to another user up there. Personally I believe estimates on Chinese local government hidden debts by any institute any time would be far from truth.
I think Evergrande and a huge portion of Chinese enterprises in different sectors have been as a matter of fact highly related to the rapidly increasing Chinese local government debts since 2011 to 2013. Most of the companies expanded / operated on more than potentially affordable financial leverage obtaining funds from banks owned by local governments. Blurred LGFV debts allows for China central government to write that off when necessary since mostly domestic. Evergrande is only tip of the ice burg.
Estimates from S&P are fair game for me unless you provide credible analysis from another finance industry-related institution. Plus, as you said, the lending to corporations from the local governments is essentially accounted for in the non-financial corporate debt statistic. The part about the domestic holding of the debt confirms that mariaVSkpop's narrative of a "debt bubble that will destroy the world" is incorrect.
In the 1980s, the Japanese government purposely dispersed prices, providing everyone with cheap money. The same policy is followed by the governments of major countries these days. But by and large, things are not as bad now as they were in the 1980s. Nowadays, real professionals are working with credits and mortgages, who use the experience of the past years, and new doctrines are worked out for the development of this sphere. And most often, mortgages are for large sums of money, and they are taken out when it is necessary to buy expensive goods. Some companies specialize in mortgage and credit issues. Here is an example of one of them, Mortgage Advisor Doncaster.
Japan may have a big debt, but they're also the biggest creditor, so I don't think so.
huh. They have money but they need to collect first before paying off debt.
Story of a bank lol
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