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| Science Forum Index » Economy Forum » Japan's Debt - Can it be mitigated given their HUGE... |
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| 2.7182818284590...... |
 Posted: Tue Oct 27, 2009 8:01 pm |
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Japan has about $800B in USDs, and they have about 180% a DEBT/GDP,
which is about a $10T debt.
Therefore, can this currency reserves be used to pay off their debt,
and/or does it imply that their debt isn't as bad as, let's say, if
they did NOT have any reserves? |
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| Rod Speed... |
| Posted: Wed Oct 28, 2009 2:35 am |
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2.7182818284590... wrote
[quote]Japan has about $800B in USDs, and they have about
180% a DEBT/GDP, which is about a $10T debt.
Therefore, can this currency reserves be used to pay off their debt,
[/quote]
Obviously not, its not even 10% of the debt.
[quote]and/or does it imply that their debt isn't as bad
as, let's say, if they did NOT have any reserves?
[/quote]
Yes, but 8% isnt much. |
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| 2.7182818284590...... |
| Posted: Wed Oct 28, 2009 9:19 am |
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Guest
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Who do the Chinese Borrow Money From; Their Fx Reserves, and Total
Debt
China has a DEBT/GDP of about 20% for their $4.3T economy. This means
that their total DEBT is about $860B.
First of all, HOW DO THE CHINESE BORROW money when they have a pegged
currency which can't be bought/sold by governments and institutional
investors? The Americans can borrow money by issuing t-bills and
bonds. How do the Chinese do this?
Second of all, since the Chinese own $800 of USDs in the form of t-
bills and bonds, does this mean that the Chinese have a "REAL DEBT" of
$60B (since $860B - $800B = $60B)? |
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| Rod Speed... |
| Posted: Wed Oct 28, 2009 2:55 pm |
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2.7182818284590... wrote:
[quote]Who do the Chinese Borrow Money From; Their Fx Reserves, and Total Debt
[/quote]
They dont need to borrow that money from anyone.
They have the USDs they got when they sold lots of goods outside china.
[quote]China has a DEBT/GDP of about 20% for their $4.3T economy.
This means that their total DEBT is about $860B.
[/quote]
Some like Japan have a MUCH higher debt/GDP ratio than that,
and they dont need to borrow that from outside Japan either.
It essentially comes from the country's savings.
[quote]First of all, HOW DO THE CHINESE BORROW money when they have a pegged
currency which can't be bought/sold by governments and institutional investors?
[/quote]
They dont need to borrow money from outside china.
[quote]The Americans can borrow money by issuing t-bills and bonds. How do the Chinese do this?
[/quote]
Some are prepared to buy that stuff even with a non floating currency.
The entire western world had fixed currencys at one time and
there was no problem with selling bonds and t-bills at that time.
[quote]Second of all, since the Chinese own $800 of USDs in the form
of t-bills and bonds, does this mean that the Chinese have a
"REAL DEBT" of $60B (since $860B - $800B = $60B)?
[/quote]
Yes, if the numbers were that simple. In practice its much
more complicated than that, particularly with regard to who
holds the debt and who owns the t-bills and bonds etc.
The other thing you are ignoring is the difference
between govt debt and total debt that a country has.
Some countrys like Australia ended with no nett federal govt debt just before the GFC
happened. Thats a quite separate issue to the total consumer and business debt tho. |
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