Bloomberg reports:
The Japanese government’s net assets in 2009 may have fallen below zero for the first time, the Nikkei newspaper reported, citing an unidentified government official. The result, which includes the central and regional governments, may add to pressure for the government to reduce bond sales, the paper said. Net assets of the central government alone were negative 300 trillion yen ($3.3 trillion) in 2008, the Nikkei said.
How can we point to the Japanese credit crisis solution as a model when the Japanese government is essentially bankrupt? Yes I know they are not really bankrupt because of the power of taxation. And I know Richard Koo gives a plausible defense of fiscal stimulus via his balance sheet recession theory. But I have argued the focus in Japan has been on maintaining the status quo which means overcapacity and malinvestment. The result is a huge public sector debt burden and now negative government net asset value.
Source
Japan’s Net Asset Decline May Restrict Bond Sales, Nikkei Says – Bloomberg.com