Despite all the alarmist rhetoric, the bond vigilantes have been perfectly happy with the JGB market, presumably because Japan offered something much rarer than mere fiscal rectitude, namely deflation.
Here is more.
Sentences to ponder
Previous post: Assorted links
Next post: A simple parable of price stickiness and international externalities
Soon as expected deflation goes away will Japan end up having a debt crisis?
According to the global press, hyperventilating right-wingers, Sinophile left-wingers and news lemmings, Japan is already well into the process of hitching its wagon to China. Since China will surpass America economically this year (according to Scott Sumner), and has no problems today or into the future that will stop its domination of the world economy, this means Japan is gonna be just fine. With a GDP 20 times the size of America’s, China will have plenty of money to lend to its little buddy in the sea.
Comments on this entry are closed.