Japan is in a "bond bubble" that could burst in a few years if the government doesn't increase taxes to cut its debt burden, Masayuki Matsushima, a former executive director at the Bank of Japan, said Friday.
Any collapse of the bubble would boost long-term borrowing costs and lengthen the time it takes for the government to fix its finances, Matsushima, currently the Japan chairman of Credit Suisse Group, told reporters.
Standard & Poor's downgraded Japan's sovereign debt rating to AA- last week, saying Prime Minister Naoto Kan's administration "lacks a coherent strategy" to tackle the country's debt, the largest in the world.
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