FT Article: Japan sovereign debt crisis looms

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	Japan sovereign debt crisis looms By Edward Chancellor Published: November 1 2009 11:40 | Last updated: November 1 2009 11:40 For two centuries, banking crises have generally been followed by a pick-up in sovereign debt defaults. These problems normally afflicted developing economies. Today, however, the public finances of most emerging markets are in pretty robust shape. By contrast, the fiscal afflicted position of the older industrialised nations is poor. Their government debt burdens are larger and economic growth prospects dimmer. Among these countries, Japan's problems look particularly acute. As Carmen Reinhart and Kenneth Rogoff observe in their newly published history of government debt crises,This Time is Different: Eight Centuries of Financial Folly, credit crunches tend to interrupt international capital flows, leaving emerging market borrowers unable to roll over their debts. Over the past decade, however, the largest developing nations have acted as creditors rather than borrowers. As a result, they have accumulated large foreign exchange reserves. The IMF calculates that among the emerging countries in the G-20, the average ratio of government debt to GDP is about 40 per cent. For instance, Russia, which last defaulted in 1998, has debts of less than 10 per cent of GDP. Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. This article can be found at: http://www.ft.com/cms/s/0/8a03a61e-c585-11de-9b3b-00144feab49a,_i_email=y.html
 
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