Japan stands behind U.S. despite growing debt concerns

3 years ago by in Travel

7977c2ee261750d6e389ee86136dc5971 Japan stands behind U.S. despite growing debt concerns

Photo by ehnmark

Despite growing debt problems in the United States, Japan is standing up and voicing its support for the country.

On April 19, Standard and Poor’s (S&P), the world’s biggest rating agency, reaffirmed the U.S.’s credit rating at AAA, however at the same time they lowered the country’s long-term credit outlook to negative from stable.

Japan was one of the first countries to come out and support the United States. Yoshihiko Noda, Japanese finance minister, was quoted in a Reuter’s article saying that U.S. is taking steps to resolve their debt problems, and for that reason, treasuries are still an attractive product for them. Japan is America’s second-biggest customer because the government has a reserve of about $1.2 trillion (U.S.) in U.S. treasury bonds. China is the biggest hold of U.S. debt, with a reserve of more than $3.3 trillion (U.S.).

The United States isn’t the only country that has debt problems, and the negative outlook from S&P could draw attention to Japan’s difficulties. The Japanese government is expected to release a supplemental budget in the next few weeks to cover the costs of reconstruction after the March 11 earthquake and tsunami. The budget could be as high as ¥ 4 trillion. In January S&P cut Japan’s sovereign debt rating to AA- but they are not expected to lower that rating in the near-term. [RT]