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Japan is on the road to default because it is expected to incur an unsustainable debt burden of $1 trillion in protecting depositors from the collapsing banking system, according to a report released by a Washington-based think tank.

“The negative net worth of the Japanese banking system is somewhere above the yen equivalent of $1 trillion. When the banking system collapses . . . the Bank of Japan will need to inject at least $1 trillion into the banks to protect depositors from losses,” says the latest issue of the Economic Outlook report by the American Enterprise Institute for Public Policy Research.

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