Currently, 10-year US bonds yield 1.74% (people are actually willing to lend the US government money for 10 years to only get an annual yield of less than 2%). Granted, Europe is spiraling down the toilet bowl and investors are fleeing to safe havens such as US Treasuries. While the Federal Reserve owns more than any other country (yes, it "buys" its own government's bonds), more than 30% are purchased by foreign investors.
Japan on the other hand, is also considered a safe haven, but has had two decades of failed monetary policy and deflation. Japan's 10-year bonds yield 0.89%. Why so low you ask? Because 95% of the holders are institutions, pensions, and individuals in Japan.
What's the worry? Japan is the oldest developed country in the world and it is only getting older. Pension funds have stated that they will become net sellers of bonds vs. buyers. When people retire, they start drawing down on their savings, which means no savings that banks and institutions will use to buy more JGBs. Not to mention that Japan's savings rate has been plummeting over the last decade.
So what's the solution? Well, it's definitely not to go to international lenders as no one is that stupid to lend the Japanese government money for 10 years for a <1% annual yield. Another solution is not to expect its population to work forever or un-retire so that they can continue to save and have pension funds buy more of that garbage. Is the solution to convince patriotic and women-loving Japanese men to buy them! Yes!
Here's a 2010 ad pushing JGBs:
“I want my future husband to be diligent about money,” a 27-year-old woman says in an ad being run in free magazines promoting a fixed-rate, three-year note that Japan started selling last week. “Playboys are no good.” She’s one of five women featured in the page, which says “Men who hold JGBs are popular with women!!”
Ridiculous you say? Probably.
How about...
2012 strategy: Japan hires top girlband AKB48 to sell government bonds.
WSJ: The all-female pop group will headline a summer campaign for "reconstruction bonds" aimed at financing projects in regions hammered by last year's quake-tsunami disaster.
Source: http://www.telegraph.co.uk/finance/economics/9290071/Japan-hires-top-girlband-AKB48-to-sell-government-bonds.html
Source: http://www.zerohedge.com/news/japanese-girl-band-wants-you-buy-jgbs
Source: http://www.theatlantic.com/business/archive/2010/06/japan-men-who-buy-government-bonds-are-super-sexy/58249/
Source: http://www.bloomberg.com/news/2010-06-09/women-prefer-men-holding-government-bonds-japan-finance-ministry-ad-says.html
Source: http://www.sify.com/finance/Breakdown-of-JGB-holders-imagegallery-others-ldupjRfjgfg.html
Source: http://www.nytimes.com/2011/07/19/business/china-largest-holder-of-us-debt-remains-tied-to-treasuries.html?pagewanted=all
Source: http://ftalphaville.ft.com/blog/2011/02/14/487246/japans-savings-rate-about-to-go-negative-goldman-says/
Source: http://online.wsj.com/article/SB10001424052970204624204577182424205452462.html
Source: http://www.stat.go.jp/english/data/handbook/c02cont.htm
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