Yes - their debt is held locally. And they own a huge chunk of ours. This means that they have less currency risk in the case of deflatiOn. Perversely, the citizens are loaning the govt hundreds of billions to buy loans whose value depreciates as their currency strengthens.
The Japanese deflation was good for consumers and tourists alike. Unfortunately the exchange rates are making it expensive to visit again. Too bad - it's such a fascinating place.
Yes, their debt is currently held locally. However, how long can that last? The Japanese government is trying harder to get ordinary citizens to buy government debt - which suggests that other sources have dried up.
Yes, actually the finance minister himself, Jun Azumi, said that "Japan had reached its limit in relying on debt and said he was aware the global community was watching him in light of the serious debt woes in Europe."
Moreover Debt-servicing is 21.9 trillion yen, a quarter of the planned budget of 90.3 trillion -a mind bending 51% of estimated tax revenue to service debt.
A full 49% of the budget will be financed by bonds. So only half the budget will be financed by taxes!
The Japanese deflation was good for consumers and tourists alike. Unfortunately the exchange rates are making it expensive to visit again. Too bad - it's such a fascinating place.