For years and years investors have been calling for an imminent Japanese debt crisis, and the ensuing collapse of the yen.
And now folks are wondering whether this weekend’s election — which saw the collapse of the country’s leading party — will finally trigger that event. As Bloomberg notes, the election was a rebuke of the ruling party’s efforts to cut debt by raising taxes, and thus the result could disconcert investors in Japanese debt.
(And as we noted this weekend, the election should worry US Democrats who may have similar ambitions to raise taxes as a means of cutting the debt.)
Anyway, we’re not sold that this will lead to a collapse. Japan’s debt problems have been well-known for years, and the value of the country’s currency and debt have only gone higher (much like the US!). The yen is actually up since last week, hardly indicative of new found nervousness.
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