Nightmarish scenarios of the coming financial collapse
After the Great Kanto Earthquake of 1923, notes Dokkyo University economics professor Takuro Morinaga in Weekly Playboy (March 5), Japan suffered a financial panic two years before the New York Stock Market crash of 1929. That precipitated the depression of Showa, with a drastic fall in property values and mass unemployment. Farmers, unable to cover their costs, sold their daughters.
Japan’s current recession, says Morinaga, was set off by the Great Hanshin Earthquake in January 1995, after which an increase in the consumption tax from 3% to 5% resulted in a drop of 40 trillion yen in Japan’s nominal gross domestic product.
The next increase in the consumption tax, planned from April 2014, ignores the lesson of history, and Morinaga predicts that within that year, a financial panic could very well ensue.
The magazine then offers its darkly pessimistic scenarios of an economy in tatters, in which one out of four workers is unemployed, and for part-time workers, hourly compensation will plummet. Employers will not even reimburse them for their transportation.
With government revenues drying up, there will be mass layoffs of civil servants as well. Public works projects will come to a screeching halt, and as budgets for education, the arts and culture dry up, Japan’s national treasures will deteriorate and crumble.
The age from which workers begin collecting their old-age pensions may be pushed back to age 75.
Meanwhile, public services like fire and rescue, and refuse collection will vanish, leaving the cities resembling a war zone.
The national health insurance scheme will also face collapse, which means patients’ out-of-pocket costs will rise by 20% or more.
What else? Foreign companies will buy up Japanese firms for a song. The defense budget will be slashed, and Japan’s already weak diplomacy will become completely dysfunctional.
With declining value of the yen, consumers will face hyper-inflation. Imagine a humble bowl of ramen priced at 2,000 yen. And the consumption tax, which is set to rise to 10% by 2015, will go up yet another 15%.
It gets even worse: with collapse of the banking system, individual assets, including savings accounts, will be frozen. (Readers are advised to spread their assets between two or three institutions.) It might come to the point that people barter their gold jewelry and other valuables for food—as was done after the Pacific War.
A severe pinch on energy will see a living standard resembling that of North Korea, with no electric power for up to 12 hours a day, and TV stations signing off by 10 p.m.
Meanwhile, the police will have their hands full. Incidents of armed robbery and rape will soar. The clearance rate for all crimes, which is currently a low 31.4% nationwide, will fall further. With the prisons overcrowded, nonviolent offenders will be released; once on the outside, they will repeat their crimes.
With no budget for fuel, police patrols will drop off, with koban and police sub-stations mobbed by unruly crowds. As urban koban become unsafe places for cops to eat or sleep, they will be left unmanned. Driven to desperation, the strong will prey on the weak, with public safety plummeting. Once the sun sets, Japan’s towns and cities will be scary places indeed.
As bad as all these may seem, they could get even worse.
“If we slip even slightly,” Morinaga warns, “we can imagine a situation where Japan takes a direction similar to the 2-26 Incident (the bloody Feb 26, 1936 coup d’etat attempt by a radical army faction).”
With the economy no longer able to sustain people, what can Japanese do to ensure their own survival? Weekly Playboy suggests five precautions to be taken. First, find ways to market skills that are likely to be popular with foreigners, such as a chef’s license for sushi or kaiseki ryori. Second, they should work out and improve their physical condition, such as through training in the martial arts, which will give them a better chance when and if public order collapses. Third is for young people to keep close ties to their parents, who may be needed to offer support. Fourth is to become adept at English, although other foreign languages, even Chinese, may help. And fifth is to seek 100% self-sufficiency through an eco-oriented lifestyle. Raise your own chickens, catch your own fish and live off the land!