US faces looming public debt wake-up call
A deepening Japanese market crisis is bound to draw attention to other countries with troubling public finances (File/AFP)
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Japan appears to be on the cusp of a full-blown currency and bond market crisis. Although the Japanese authorities spent more than $70 billion in May to prop up the yen, the currency has slumped to a 40-year low and is estimated to be at least 15 percent undervalued against the US dollar. Meanwhile, Japanese long-term bond yields have surged to multidecade highs following the end of the Bank of Japan’s yield-curve-control policy. And with no signs of Japan addressing the underlying causes of its currency’s downward spiral anytime soon, there is every reason to fear that the crisis will deepen.
