[Reuters] Japan to buy euro debt as Portugal resists bailout
reuters.com/article/idUSTRE70A10U20110111
reuters.comPosted Jan 11, 2011, 10:54 AM UTC
67
reuters.comJapan wastes money on stupid shit. Not nearly as bad as the USA of course. Still stupid.
-1
[deleted]
2
Why is a country with a debt of 200% of its GDP using borrowed money to buy another country's debt?
I can think of three reasons quickly:
It's a good investment. Japan prints money for free to gain a nice interest rate in Euros. The Yen is going to weaken against the Euro over the next few years as well which will add to the returns.
It shows confidence in the EU. The EU GDP is about the same size as the US GDP and the EU is a huge export market for Japan. Japan is still an export-heavy economy so the faster the customers recover the faster Japan will improve.
It looks good for Japan. A bit of positive PR never hurts.
because China is buying Japan's debt (and Euro Zone debt!)...
Japanese citizens are mighty savers and buy almost all of Japan's debt, so it's not that clear with Japan.
But yes, China's got to be pretty worried about ever getting it's money back.
No, actually, this is old information.
After the real estate bubble and subsequent stock market bust, savings rate for Japan dropped below 10% (used to be closer to 20%). This is what happens when the interest rate for a nation of savers is dropped to 0% for a long period of time (+10 years).
For context, the US savings rate is right around 8%.