japan's indebtedness

[Deep Blue]

Yes, agreed ETFs are assets of the BoJ and not the central Government … I just can’t think its appropriate to add these ETFs to the Government asset side at the St Louis Fed seems to have done.

I’m not an accountant or economist and I could be completely wrong but these two things immediately jumped out at me. I would have assumed the IMF figures are broadly comparable across countries in the first place - otherwise what’s the point of compiling the data?

[ToushiTime]

I took a look at that Fed balance sheet link again.
It says Bank Reserves in the liabilities section.
Wouldn't that include the money the BoJ paid for the ETFs to market makers/whomever and that went into their commercial bank accounts and then in those banks central bank reserves?
That would balance the ledger, I guess?

[Deep Blue]

Like I said, the corporate and household balance sheets here are extremely strong. Post two of this very thread:

It is very true that Japan as a whole is not overly indebted, as household and corporate balance sheets are in aggregate extremely healthy

Hitachi and Fujitsu don’t hold any significant amount of JGBs though - it is very much concentrated in the banking system. Why did you pick those companies?

Japanese government debt is not illusory… the Government spends more than it takes in every year and the debt pile is growing. Also, the interest rate it needs to pay is going up too. Borrowing at 0% is in the past now.

But ultimately there will need to be a transfer from corporates and households as the Government fiscal situation isn’t getting any better. Like I said in the posts above, that’s a key reason I keep the majority of my assets outside of Japan.

Oh and JGB stockpile is 15% owned by non-Japanese, not 5% - also on a rising trend

[ToushiTime]

Like I said, the corporate and household balance sheets here are extremely strong. Post two of this very thread:

It is very true that Japan as a whole is not overly indebted, as household and corporate balance sheets are in aggregate extremely healthy

Hitachi and Fujitsu don’t hold any significant amount of JGBs though - it is very much concentrated in the banking system. Why did you pick those companies?

Japanese government debt is not illusory… the Government spends more than it takes in every year and the debt pile is growing. Also, the interest rate it needs to pay is going up too. Borrowing at 0% is in the past now.

But ultimately there will need to be a transfer from corporates and households as the Government fiscal situation isn’t getting any better. Like I said in the posts above, that’s a key reason I keep the majority of my assets outside of Japan.

Oh and JGB stockpile is 15% owned by non-Japanese, not 5% - also on a rising trend

That's all true but I guess they have a point in that Japan's stronger positive net international investment position (NIIP) is better than the negative NIIPs of the US and the UK, and that partially mitigates its high net debt-to-GDP ratio relative to those nations.
https://en.wikipedia.org/wiki/Net_inter ... ion_(NIIP)

[Deep Blue]

I think we need to be very clear in distinguishing between Japan as a country and the Japanese Government.

The former isn’t a huge outlier when you aggregate up all the assets and liabilities held by government, corporate and household entities. Japan isn’t bankrupt.

However the Japanese Government is in dire straits and it is an outlier vs other countries. Options to remedy this include boosting productivity (has not happened for decades), serious inflation to reduce the real value of debt (maybe this is starting?), widespread immigration to address demographic problems (seems unlikely) or wealth transfer from those entities in Japan who hold assets.

The answer is probably a combination of the options above… but it could be a bumpy ride.

[Deep Blue]

I don’t disagree that risk-taking and innovation is far too low across Japan’s corporate sector. Management teams focus on things other than maximizing returns.. probably this is why Japan is a great place to live but has been a poor place to invest.

[VG1]

Yes, that’s my plan. I have PR in Hong Kong which has no CGT, so I will realize my capital gains there.

And yes, I only invest in funds that don’t pay dividends. So no income, just capital growth. And crucially, I won’t accept PR in Japan so won’t be subject to the exit tax here.

I dont know how long you have been living in Japan but if more than 5 years out of the past 10 years you are considered a permanent resident from a tax point of view even if you do not have a permanent resident visa (these are 2 different things) and as such if you go to Hong Kong and realize capital gains you have to fill in a tax return in Japan and pay taxes.
If you have been a tax resident for less than 5 years, sell securities held abroad, and do not remit the proceeds to Japan, you may not have to pay capital gains tax in Japan though. In such a case you do not even need to go to Hong Kong to sell.
Of course, this is just my understanding. Only a competent tax accountant can confirm.

[Deep Blue]

I’m talking about leaving Japan and ceasing to be a resident, then realizing capital gains. Giving up jusho. Not a holiday.

Japan doesn’t tax foreigners for capital gains realized after they’ve left and are living in another country.

The situation is a bit complicated by the exit tax, but as it stands I’m not required to pay this on my visa.

[VG1]

I’m talking about leaving Japan and ceasing to be a resident, then realizing capital gains. Giving up jusho. Not a holiday.

Japan doesn’t tax foreigners for capital gains realized after they’ve left and are living in another country.

The situation is a bit complicated by the exit tax, but as it stands I’m not required to pay this on my visa.

I thought that the exit tax applied to anyone who has lived in Japan for 5 out of the last 10 years, regardless of their visa status (not only to people with permanent residency). Is it different?

[beanhead]

I thought that the exit tax applied to anyone who has lived in Japan for 5 out of the last 10 years, regardless of their visa status (not only to people with permanent residency). Is it different?

There are some exceptions, which DeepBlue must fall under.
https://retirewiki.jp/wiki/Exit_tax#cite_note-1