But They are Fiscally FUBAR…

• Significant Fiscal Deficits
• Gross Financing Needs Are Remarkable
• Debt/GDP now above 80% in all G7 Countries
• Debt/GDP ratio up significantly in Spain, Greece, Portugal, and Japan
• In most G7 countries short term debt is 20% to 30% of total debt outstanding

and Financial Repression and Domesticization has become rife…

• For Japanese investors JGBs look attractive
• Foreigners own only 5% of JGBs
• Japan: Holders of government debt as % of total outstanding. Foreigners hold 5%
• Institutional investor holdings of government debt

which has lead to a nation (people and banks) that are entirely as one connected to this SNAFU…

• Japanese banks have been increasing their holdings of Japanese government bonds
• Japanese banks: Deposit growth higher than loan growth
• Japanese banks buying JGBs for their surplus deposits
• Japan’s elderly rely mainly on public transfers when they turn 70