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If you’ve let the crisis in Egypt take you mind off some of the globe’s other less splashy crises, let me direct your attention to Japan.

On January 26 Standard & Poor’s cut its credit rating on Japan to AA-. It was the first cut to Japan’s credit rating by S&P in nine years. The ratings company cited Japan’s huge $11 trillion in government debt and the country’s dysfunctional politics as reasons for the downgrade. The Japanese government, S&P said, lacks a coherent strategy for addressing the country’s debt.

The biggest immediate effect of the downgrade has been to put downward pressure on the yen and raise fears that Japan will have to pay higher interest rates on its debt. (The latter seems a distant worry given the country’s massive pool of domestic savings.) Economy and Fiscal Policy Minister Kaoru Yosano called the downgrade “regrettable.”

I’d make an argument that this is just one adjustment in a string of many that the global financial system will need to make as it adjusts to a new world pecking order. With an AA- rating Japan, the world’s most indebted country, now shares the same credit rating as China, the world’s biggest creditor nation. (Yes, I can think of a list of reasons—a huge local debt load, a mountain of bad loans at China’s banks, a dysfunctional monetary system—that would make me reluctant to give China a AAA but if we’re looking at the ability of a country to pay its debts, equating the risk of Japan and China seems out of line. S&P upgraded China in December when it cited the country’s $2.85 trillion in foreign exchange reserves.)

Off the top of my head I can think of at least one other country about which S&P could say just about the same thing as it just said about Japan. (Saying “The United States lacks a coherent strategy for addressing the country’s debt” doesn’t seem a stretch.) In comparison to Japan’s $11 trillion in debt, U.S. government debt stands at $14.1 trillion. Of course, the U.S. economy at an official $14.6 trillion in GDP is about three times the size of Japan’s economy at an official $5.4 trillion in GDP.

As a consequence of the downgrade on January 26, S&P lowered ratings on other entities including four insurers and six government- related institutions including Japan Finance Corp., Japan International Cooperation Agency and Japan Finance Organization for Municipalities, according to a separate statement. All institutions are now graded AA- at the company.

Contemplating the financial condition of Japan and the United States on a day when snow is again predicted for New York (and it feels like Ragnorok is just around the corner) brings “Ozymandias” by Percy Bysshe Shelley to mind:

And on the pedestal these words appear:

`My name is Ozymandias, King of Kings:

Look on my works, ye mighty, and despair!’

Nothing beside remains. Round the decay

Of that colossal wreck, boundless and bare,

The lone and level sands stretch far away.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. For a full list of the stocks in the fund as of the end of December see the fund’s portfolio at