It was always going to end in tears. A huge fiscal bust on private debt leading to huge government debt as the public sector bails the banks out, entrenched interests preventing reform, ageing population, stagnant economic growth, deflation and falling corporate investment. Japan won't go bust in the technical sense as they can just print money to pay off debt (as some could argue they already are doing) but they could easily up with a worthless currency and a huge depression.
The bigger concern for the rest of the world though is that this is exactly the same situation as Europe finds itself in at the moment, and Europe can't just print to pay debts as no single country controls the Euro. More sovereign defaults are a real possibility.
I've been saying for years that in economic terms Europe is Japan writ large. I just hope I'm wrong.
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