Market Watch: America's 'Sugar Daddy' Just Went Broke - And You're Stuck With the Bill
Article by Charlie Garcia in Market Watch
Five months ago, the signs were clear: America’s biggest lender was heading for the exits. This week, they started packing. Your mortgage rate noticed.
Back in June, I explained that Japan, America’s favorite ATM for 40 years, was about to display “INSUFFICIENT FUNDS.” Most people ignored this the way you ignore your “check engine” light. This week, the engine caught fire.
Japan’s 20-year government bond yields just hit their highest level since 1999. Their 30-year government bonds crossed 3.3% this week — an all-time high — up a full percentage point since spring. For Japan, that’s not a yield. That’s a scream.
Why should you care? Because Japan owns $1.2 trillion in U.S. government debt — more than your weird uncle owns in grievances — and when your biggest lender suddenly discovers it can make money at home, it tends to stop financing your lifestyle. It’s like your friend finally realizing he’s been picking up every bar bill since 1985.
The 40-year bar tab comes due
For four decades, America’s run an arrangement so sweet that nobody wanted to talk about it. Japan makes stuff. Americans buy it. It takes the dollars and loans them back to the U.S. by buying Treasury bonds. It’s like .....