RetireJapan

RetireJapan wrote: ↑Mon Aug 07, 2023 10:23 am

Fiscal challenge? Government can always just print money.

Umm, Japan tried that before... A Mr Takahashi would have been able to explain the consequences had he not been murdered before hyperinflation took hold. There is no such thing as a free lunch.....

Wales4rugbyWC19 wrote: ↑Mon Aug 07, 2023 12:35 pm 　

Yes and no.... A lot of British debt is held by foreigners, and they are a lot more demanding aka last year's mini budget crises, whilst most Japanese is domestically held.

The ultimate owner is not really relevant to the point? The bonds need to be repaid to whoever owns them - foreigners, banks, wealthy indivduals, corporations... whoever. Unless you are saying the MoF can default on their JGB's because tbey are mostly owned by Japanese? If so, I would rather not be around to see what happens if they tried this!

Deep Blue wrote: ↑Mon Aug 07, 2023 12:42 pm

Wales4rugbyWC19 wrote: ↑Mon Aug 07, 2023 12:35 pm 　

Yes and no.... A lot of British debt is held by foreigners, and they are a lot more demanding aka last year's mini budget crises, whilst most Japanese is domestically held.

The ultimate owner is not really relevant to the point? The bonds need to be repaid to whoever owns them - foreigners, banks, wealthy indivduals, corporations... whoever. Unless you are saying the MoF can default on their JGB's because tbey are mostly owned by Japanese? If so, I would rather not be around to see what happens if they tried this!

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You tell that to the Argentinian government whose bonds were bought up by foreign vulture funds and had their naval ships impounded in Ghana until the Argentian government had paid back the value of the bonds with extortionate interest.

A bit closer to home, one of the biggest purchaser of US Treasury bills is the Chinese government. An authoritarian government is gradually having an increasing influence over the US government debt markets. You never know when they might exert this influence and sell up. Give me a Japanese obachan who has squirrelled away her cash into extremely low yielding Japanese government bonds rather than the Chinese government as the owner of my national debt.

I think you will find that any country who tries to default on their debt - whether held domestically or by foreigners is going to be in a world of pain.

Most JGBs are owned by banks, pension funds and insurers in Japan. Default = complete failure of the entire domestic financial system. Every bank and insurance company is instantly bankrupt. Every pension fund becomes massively underfunded - including the GPIF which has 25% of assets in domestic bonds.

From a political perspective, it is a lot easier to default on debt held by foreigners than it is held by people in your own country. It is better to screw over foreign hedge funds, foreign banks and foreigner insurers by defaulting on them? Or is is better to do so to your citizens and the people who vote for you? Either option is unthinkable.... so I am not really sure why you think the majority of JGB's being held domestically is an advantage in Japan's fiscal sustainability? The debt still needs to be paid back.

I wonder about the risk of another hyperinflation in Japan, although I will readily admit I don't have any insight into it. My understanding is that in the 1930's, 80 yen was a pretty substantial monthly income and you can still find placards here and there from the Meiji era mentioning a magnificent gift of 10,000 yen from the imperial family for one cause or another. I believe the majority of JGBs are currently held by the Bank of Japan (at least it was reported that BoJ held 52% of the outstanding JGB debt as of last December) which seems like a lot of stimulus.

I had an experience this past weekend which reminded me how unusual Japan is as a place to live. While running errands in Shibuya a small wallet where I keep my cash stash and domestic atm cards fell from my pocket and I didn't notice it was gone for about an hour. I nervously retraced my steps and checked at each store I'd visited to see if it had been reported missing with no luck. Finally went to the Koban by the Scramble crossing and it had been turned in with everything intact. In fact, I had remembered it had 120,000 yen (it is my cash "emergency fund") but it actually had 130,000 yen when they handed it back to me with all the atm cards. My only regret was that there was no way to leave any kind of a reward for the kind soul who found and returned it. A high debt-to-gdp ratio and challenging demographics may be serious issues but I have to tip my hat to the kind of society the Japanese have created here.

TokyoWart wrote: ↑Tue Aug 08, 2023 8:03 am My only regret was that there was no way to leave any kind of a reward for the kind soul who found and returned it.

This is handled when they turn the thing in. The finder gets to specify whether they want:

1. a reward (around 10% of the value) and/or
2. to be contacted when the owner is found

If the item is not claimed I believe the person who found it gets to keep it.

I've handed wallets and smartphones in half a dozen times, always choose 'no' and 'no' for those options

TokyoWart wrote: ↑Tue Aug 08, 2023 8:03 amI had an experience this past weekend which reminded me how unusual Japan is as a place to live. While running errands in Shibuya a small wallet where I keep my cash stash and domestic atm cards fell from my pocket and I didn't notice it was gone for about an hour. I nervously retraced my steps and checked at each store I'd visited to see if it had been reported missing with no luck. Finally went to the Koban by the Scramble crossing and it had been turned in with everything intact. In fact, I had remembered it had 120,000 yen (it is my cash "emergency fund") but it actually had 130,000 yen when they handed it back to me with all the atm cards. My only regret was that there was no way to leave any kind of a reward for the kind soul who found and returned it. A high debt-to-gdp ratio and challenging demographics may be serious issues but I have to tip my hat to the kind of society the Japanese have created here.

I had a similar experience in Shibuya, wallet fell out of my pocket on the bus - had it returned with all contents intact the same day. I think the low Gini co-efficient is one of the best things about living in Japan - you don't get the same disparity in society between the super-rich and super-poor. It isn't quite accurate to say everyone is middle class, but it's a much fairer and less unequal society than many developed countries. This is probably a factor behind the low level of crime too. Definitely one of the major plus points for making a life here.

RetireJapan wrote: ↑Tue Aug 08, 2023 8:11 am I've handed wallets and smartphones in half a dozen times

And they were only trying to reserve their table

adamu wrote: ↑Tue Aug 08, 2023 11:27 am

RetireJapan wrote: ↑Tue Aug 08, 2023 8:11 am I've handed wallets and smartphones in half a dozen times

And they were only trying to reserve their table

It’s a real culture difference isn’t it! Try that in the UK and your stuff would be swiped pretty quickly.. but I have no compunction at all doing it here. Blue tarpaulins discipline and respect also still amazes me

Deep Blue wrote: ↑Mon Aug 07, 2023 12:42 pm The ultimate owner is not really relevant to the point? The bonds need to be repaid to whoever owns them - foreigners, banks, wealthy indivduals, corporations... whoever. Unless you are saying the MoF can default on their JGB's because tbey are mostly owned by Japanese? If so, I would rather not be around to see what happens if they tried this!

As I understand it, about half is owned by the Bank of Japan - technically independent, but in practice....

Political economist Prof Mark Blyth puts it this way, if you lend yourself the money to buy a house, how much do you really owe?

Given that more than 90% of the debt is held domestically, it's a really different position to the US or other countries.