From Bloomberg:
Japan’s sovereign-rating outlook was cut to “negative” by Standard & Poor’s as the nation’s reconstruction needs following last month’s earthquake will likely add to what’s already the world’s biggest debt load.
The outlook on Japan’s local-currency debt rating, at AA-, the fourth-highest grade, was lowered from “stable,” S&P said in a statement today. The company had reduced the rating by one step in January in the first cut since 2002. Moody’s Investors Service said last month the disaster may bring forward the “tipping point” for the country’s bond market…
So much for the early, post-earthquake, “don’t worry, this will actually help” nonsense. Japan has been teetering on the edge of disaster for 20 years…kept limping along by pure, unadulterated Keynesianism which has now left Japan under a mountain of debt right when they suddenly need bags of money just to put things back the way they were. Here’s a news flash for all the financial experts out there: this will not be good for the Japanese and global economy. It will make things worse. As will rising oil and food prices. As will Chinese inflation. As will burgeoning US debt. All the good news you can scratch up out there amounts to nothing compared to the fundamental problems of the economy.
So, hang on to your hats – and your wallets – this is going to get rough.
HAT TIP: Mish’s
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