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Except for one complication. Japan's public debt is largely owed to it's own citizens, such a large proportion being internal debt. Even if they defaulted on th
by gregsq 14y ago
Except for one complication. Japan's public debt is largely owed to it's own citizens, such a large proportion being internal debt. Even if they defaulted on the external component, they'd still have a problem of the type Iceland could avoid. Iceland wrote off banking debt, which was something like 70% of their external debt.
- twoodfin 14y agoI don't think the term you want is "write off". Creditors write off debt. Borrowers default.
- gregsq 14y agoYou're right, my language was imprecise, and I'm conflating two events. The Icelandic government declined to recapitalize failing banks, even when under enormous pressure to do so by the UK government and others. The pressure you may know was partly due to various local government bodies and other institutions having deposits with Icelandic banks. Because the Icelandic government declined to act as insurer for those deposits, the insolvency of them was seen as an effective write off of national indebtedness to other sovereigns. Agree it's not the same thing though.
- twoodfin 14y agoNo problem. I just get worried that people hear about corporations or nations "writing off" debt and wonder why the system is rigged so they can't "write off" their own debts. Of course you can, as long as those debts are owed to you and not by you.