Title: Japan's economy - About that debt | Free exchange | The Economist
Headings: About that debt
Japan's economy
About that debt
Content: And still another answer is that while Japan was once a very dirty shirt indeed, it is looking less dirty by the day. Among big bond issuers euro-area economies are moving up the league tables. Those euro-area economies do not have their own central bank, and the central bank they do have is not nearly as eager as the Bank of Japan is to buy government bonds. If liquid rich-world bonds are a scarce and precious resource, then the troubles within the euro zone are good news for Japan. And another sign that it ought to worry a bit less about its fiscal shortfalls. But let's also be clear about the nature of Japan's debt problem. Its ratio of gross government debt to GDP is over 240%, which sounds perfectly awful. But if one nets out the value of debt held by different branches of Japanese government, then the ratio falls to less than 140%. The Bank of Japan alone holds about 20% of outstanding Japanese government bonds and is buying more each year than the government, spendthrift that it is, can issue. And despite all that interest rates and inflation are as low as low can be.