Jump to Navigation

Takeo Hoshi Quoted in The Los Angeles Times

As Japan seeks to finance reconstruction, U.S. debt costs could rise

03/14/2011
Don Lee and Tom Petruno, The Los Angeles Times

Tokyo may need to raise money to rebuild after the earthquake, but selling their U.S. Treasury bonds could create problems of its own. The nuclear power shutdown will affect production throughout Japan and boost demand for oil.

Japan's need to raise huge amounts of money for reconstruction after the disastrous earthquake raises the prospect of higher U.S. costs to finance its own budget deficit and ultimately higher costs to American consumers on financing everything from houses and cars to credit card debt.

Tokyo has long been a major purchaser of U.S. Treasury bonds, helping to keep demand for U.S. debt high and the cost of financing it low. Last year, Japan bought about $130 billion in Treasuries, much of it with funds accumulated from the nation's trade surplus.

Now, as it begins the costly process of rebuilding, Japan will almost certainly be buying less Treasury debt and other foreign assets. That in turn could push the United States to pay higher rates on its securities to attract new buyers, eventually putting upward pressure on other U.S. interest rates — including what American consumers pay for credit.

Click here to read the full article.

Related Links

Takeo Hoshi can provide commentary on Japan's financial system, bank regulation, macroeconomic conditions and macroeconomic policy.

Similar Stories

Back to Top