Japan’s Finance Minister Taro Aso has warned the United States government that a default over their financial debt ceiling can lead to not just a national, but even a global financial crisis. If they are unable to lift it from the current $16.7 trillion, it can disrupt the financial market and affect Japan, which has numerous holdings on US Treasury bonds.
“The U.S. must avoid a situation where it cannot pay, and its triple-A ranking plunges all of a sudden,” said Aso, echoing the warning of China, which along with Japan, are the two largest foreign creditors of the US. The latest figures show that Japan holds $1.14 trillion in US bonds, second only to China’s $1.28 trillion. Aso emphasized that it’s important for Washington to resolve the political and fiscal deadlock they are experiencing right now to avoid damaging the global economy. Sources say several Japanese officials had emergency telephone conferences with people from the US Treasury Department, but a senior Japanese government official said it was just part of regular communications between the two countries.
The ongoing paralysis in Washington has been worrying Tokyo, as it raises the possibility of a lessened US presence in the Asia-Pacific region. This comes at a time when Japan is facing territorial disputes with other countries, particularly China and South Korea. China’s growing military might has also been a source of concern and the strong US military presence is what some consider to be keeping China at bay. The recent government shutdown has forced US President Barack Obama to miss the Asia-Pacific Economic Cooperation (APEC) forum in Bali, Indonesia, leaving the leadership role to Chinese President Xi Jinping.
[ via New York Times ]
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