Title: When Will Japan's Debt Crisis Implode?
Headings: When Will Japan's Debt Crisis Implode?
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Content: As we pointed out in previous dailies, the expected asset bubbles that were created after the WW2 had finally burst in 1989, after the increase of inter-bank lending rate from the Bank of Japan. Once the stock market crashed and equity prices dropped, banks and insurance companies were left with lots of bad debt. The Japanese government and central bank supported these organizations by bailing them out and providing low-interest credit. Thus, these firms have to rely on support. But this eventually became unsustainable, so banking institutions had to be consolidated and nationalized. Throughout many years, other fiscal stimulus initiatives were also used to help reboot the stumbling economy. Because of these government-approved actions, Japan’s debt level skyrocketed to become the highest in the world. But all is not lost. Many other countries, including Greece, owe mostly to foreign creditors. However, most of Japan’s debt (including government bond liabilities) are held by its own citizen, so the risk of defaulting is much lower.