NEW YORK - Another day another downgrade by a credit agency who consistently try to ruin their reputation. Moody's today downgraded Japanese debt but global markets largely ignored their reaction. Moody's lowered Japan's credit rating further into AA territory. However Japanese bond yields are the lowest of any country at under 2% for a 20 year yield.
Moody's like the S&P are concerned about numbers which in theory mean a lot but in practice mean little. Japan's debt currently sits at $12.5 trillion U.S. The company pays 2% interest on this amount or $250 billion. The country currently has GDP of $5 trillion at a 15% effective tax rate that is $750 billion U.S. brought in by the government of Japan each year. While debt is making up $250 million of the country's government income, at the same time the country has economic policies to counter this.
Certainly a number which is not a cause for alarm. The next reason Japan should not be downgraded is its debt is held in its own currency. The government can simply print more money if it is in trouble.
The next reason Japan debt should not have been downgraded is the Japanese public owns 95% of the company's debt. While the government of Japan cannot just take their money having their own creditors be there own people is a far better than having another country. Considering they can tax these people the government can create policies to get this sort of wealth back. The U.S. Government can't tax China who holds the most U.S. debt!
Japan is an extremely unique country, with the people of Japan saving such a large percent of their wealth at such low interest rates. All economic laws should be thrown out of the window anyways when there is a unique country like Japan.
So today was another credit downgrade and another mistake by people who don't deserve the pen they write with.
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