Fitch downgrades Japan to A+, outlook negative

http://www.marketwatch.com/story/fi...k-negative-2012-05-22-5911734?dist=beforebell

May 22, 2012, 5:18 a.m. EDT

By William L. Watts
FRANKFURT (MarketWatch) -- Fitch Ratings on Tuesday downgraded Japan to A+ and issued a negative outlook on the country's credit rating, citing rising public debt levels. Japan's long-term foreign rating had stood at AA and its local currency issuer default rating was previously at AA-. "The downgrades and negative outlooks reflect growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios," said Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, in a news release "The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk," he said.

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Now...let's review what Kyle Bass said about Japan at AC2011:

http://www.youtube.com/watch?v=5V3kpKzd-Yw#t=1882s

It is not suprising since Japan has the highest debt to GDP ratio of any country in the world:
http://www.usnews.com/news/articles/2011/01/28/the-10-countries-with-the-most-debt

They put Greece to shame in that category!

Good article on the situation:
http://www.thedailybell.com/3916/Ja...-No-Urgency-for-Japan-Until-Sudden-Panic-Hits

The parallels between Japan and the U.S. are interesting...

"Mr. Noda has warned that Japan could eventually face a debt crisis akin to that afflicting Europe and is staking his job on a plan to double the consumption tax rate to 10 percent by late 2015. That increase, he has argued, is necessary to pay for soaring welfare costs and pension payments.

But lawmakers even within his own party have attacked the plan, saying it would put a damper on growth just as Japan's recovery gets on track. Even if Japan does double its sales tax, the revenue will most likely not be enough to balance in the medium term."

"As long as these yields remain at such historically low levels, the impetus for the government to meaningfully change and reform its environment is going to be quite limited," Woods said.

...Lets see, high debt, overspending, don't want to hurt the "recovery", artificially low interest rates to keep the debt under control... seems familiar somehow...

Moody’s Investors Service cut Japan’s credit rating, a setback to Prime Minister Shinzo Abe a day before today’s campaign start for an election that he wants to focus on the economy.

Moody’s reduced the rating for the world’s third-biggest economy one level to A1, the same as Bermuda, Israel, Oman and the Czech Republic, it said in a statement yesterday in Tokyo. ...

S&P has Japan at AA-, equivalent to the Aa3 level at Moody’s before the reduction. Fitch Ratings has Japan at A+, the same as the new rating from Moody’s.
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http://www.bloomberg.com/news/2014-...dit-rating-in-blow-to-abe-ahead-of-polls.html