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Debt to GDP ratio

May 12th, 2019, 3:25 pm

Sorry, if this is a naive question for this forum. Is'n the Debt to GDP ratio of a country a measure of it's "solvency"? And If it is why is not Japan (234.18%) on the doorstep of default? By the same token, how come Japanese government bonds trade at a negative yield?
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Re: Debt to GDP ratio

May 12th, 2019, 5:50 pm

First part seems well-answered at Quora.  Re the negative yield, at least according to Reuters , it is partly a stable situation because apparently foreigners can earn a decent premium over comparable US Tsy's with little perceived risk due to the answer to the first part. As for the usual argument that, as a counter to accepting neg. yields, Japanese savers could just put their money under a mattress, we all know they don't have mattresses. :D 
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Re: Debt to GDP ratio

May 12th, 2019, 6:53 pm

Only tatami! If you are expecting a soft landing, have I got news for you.

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