Part 3/7:
Central to this precarious scenario is the Bank of Japan, which has purchased a substantial portion of government debt, unlike the U.S., where government bonds are primarily held by private entities. Yet, this arrangement has not shielded Japan from the burden of its immense debt. Recent developments have illustrated a precarious shift in market dynamics, where an auction of Japanese debt revealed the weakest fundamentals since 1987, indicating a dwindling appetite for Japanese bonds. This drastic market behavior is reminiscent of a financial crisis, as noted by JP Morgan, which characterized the situation as a "collapse."