Aug 23

Interesting Market Stat from Paul Krugman

The link to his blog is here…anyway…the stat is…

One thing you sometimes hear is that the game will be up when the ratings agencies downgrade U.S. debt. I wonder how many of the people saying this know that Moody’s and S&P downgraded Japanese debt in 2002, with Moody’s actually putting it below Botswana and Estonia.

And 8 years later, Japan can still borrow at less than 1 percent.

To put this comment into further context, Krugman is responding to all those who believe US debt is so high that the government may not cope. Whilst newspaper talk suggests Japanese debt is outrageous a less than 1% yield does not suggest any market concern whatsoever. Clearly the market is not concerned by US Government levels of debt either as current 10 year bond yields are around 2.60%…and that is an interest rate I would love to be paying on my loans!

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