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Will the Japanese government bond market collapse in the future?

05 Jan 2010
Posted by matt

From Seeking Alpha: Japanese Government Bond Market at Risk of Collapse?

... a number of hedge funds are starting to place bets on the collapse of the Japanese government bond market. Kyle Bass, head of Hayman Advisors in Dallas, TX said it “is going to happen; it’s just a question of when."

I note here that I don't think the bond market will collapse because (as the article notes) most bonds are held by Japanese (through institutions like the post office). However, considering that the population is aging and the savings rate has been decreasing, there's obviously going to be future problems. Moreover in a country known to indulge various booms, it's not impossible to imagine a sudden anti-bond boom. So while I don't think it will happen, I wouldn't eliminate the possibility. I would read the whole article.

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