Goldman's Jim O'Neill Poses A Simple Question For Investors

Jim O Neil

In a FT piece on the US and Japanese economies, Goldman’s Jim O’Neill offers…

With this in mind, does Japan look attractive relative to other markets? I recently asked a major investor if he finds Italian bonds at seven per cent or Japanese bonds at one per cent more attractive. Italy has debt to GDP ratio of 120 per cent, while Japan’s is more than 200 per cent. He couldn’t answer me.

Of course, the first thing this should emphasise is that debt-to-GDP is a lousy measure of where yields should be, or where sovereign risk lies.

And to understand why nobody wants to buy Italian debt with these juicy yields, see here.

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