S&P Lowers Outlook On Japan's Debt Rating

Today, Standard & Poor's announced that it has lowered the outlook on Japan's debt from stable to negative, in response to uncertainty regarding glacial growth and looming deficits in Japan.

While the debt rating has not been officially lowered, all signs indicate that it will drop from its current rating of AA at some point in the future unless substantial progress is made. Japan's increasingly inflexible economic policy, however, may make such necessary progress unlikely.

Downgrading Japan's debt rating will make it more expensive for Japan to borrow, which will devalue the yen. This situation is a troubling echo of the problems experienced in Portugal and Greece, which Moody's has labelled "troubling".