[Kosh]

Just out of curiousity, Japan has an enormous debt that is 135%+ of it's GDP, so why hasn't this caused a financial meltdown (yet)?

Also why is their economy so anemic?


EDIT: How is debt to GDP calculated? Japan's public debt is about $6 trillion, but it's gdp is $2 trillion, shouldn't its dent to gdp ratio be more like 300%?

[redsniper]

I dunno. Same reason the US hasn't collapsed yet?

[Polpolion]

International debt doesn't really mean too much in this situation. Look at the US's debt towards China; What's China gonna do if the US doesn't pay up within the next century, declare war and loose its biggest buyer? They don't really have much to do other than politely ask for the money unless they want to further damage their relationship with the US with sanctions or something.

[Hippy]

The money is going from Japan to the US. It's loans etc.

Sooner or later it becomes in Japan's national interest to write the debt off as bad... regardless of what that would do to their standard of living and their relationship with the US.

Japan (like China) maintains this arrangement because it is currently in their national interest to do so. But it wont be for ever - and if the yanks don't pull their finger out it will reach the point that the Japanese will be better served by copping the economic hit on the chin and letting the yanks sink.

As to why the US needs the money - look no further then the good 'ole war on terror/iraq/afghanistan/etc...

Who fights 'long' wars by cutting taxes domestically? Idiots do. It's what happens when you put ideologues like Ben Bernake in charge of the Fed.

[Kosh]

The money is going from Japan to the US. It's loans etc.

So they are able to sustain themselves from the interest they collect from the US?

[Hippy]

Eventually Kosh, eventually.

Think British WW2 repayments to the US in terms of length.

[BrotherBryon]

Have no idea even though I made an A in economics. Honestly I don't think any one really knows how all that works on a global scale.