Low expectations abroad for Japan

By Alan Wheatley

Politics Dec. 19, 2012 - 06:47AM JST ( 4 )

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4 Comments

0

some14someDec. 19, 2012 - 08:06AM JST

Overseas view matches with global community opinions expressed here on JT site well before election results :)
2

NathawDec. 19, 2012 - 08:42AM JST

The government is running a budget deficit of about 10% of gross domestic product and its gross debt has risen from less than 68% of GDP in 1990 to more than 235% now.

More public spending will make debt of GDP will move beyond 300%. It is more than Greece, Irealand, Portugal and Spain combination of debt. Spending will make more employments and joys to retailers. The downside is higher and higher national debt. Credit rating will be downgraded.

Yet if loose fiscal and monetary policy were a cure-all, Japan’s economy would not be in the sick ward in the first place.

Sick economy will not recover fully with loose monetary policy. China tried in 2008 with infrasturcture projects. The consequence is many building projects have not get any commercial returns. Banks have to write off bad loans which will never be repaid. Since 1930, "Spend and Borrow" was a short term fix policy. It will never make sustainable economic growth.
3

ScroteDec. 19, 2012 - 11:11AM JST

Governments only need growth because they cannot control their spending. With a balanced budget there will be no problems with zero growth. Perpetual growth is impossible.
1

herefornowDec. 19, 2012 - 11:17AM JST

It might be quite rational, as long as markets keep cooperating, for Japan to stick with its “happy depression”, O’Neill concluded

Yup. So long as the older folks are basically all on fiscal Prozac and believe everything is rosy, Japan will never face the music and make the tough choices it needs to -- structural reform, female equality in the work force, immigration, etc. So the younger generations are going to inherit a competely broken system in a decade or sooner.