Friday, December 25, 2009
Still-sinking Japanese economy demonstrates the perils of public debt
If Japan's government is still in business, there's got to be hope for any and all countries burdened with debt -- even seemingly crushing debt. Lawmakers in Tokyo approved a trillion-dollar budget Friday that -- get this -- includes $485 billion in new debt that will push the country's indebtedness to nearly twice its gross domestic product, according to the New York Times. At 181 percent of GDP, Japan has by far the largest debt in the industrial world, the Times said. The new budget, which exceeds a trillion dollars for the first time, includes new spending on the country's education and welfare programs to help stimulate the economy, which is suffering from high unemployment and deflation. The budget is the first for the new government of Prime Minister Yukio Hatoyama, the Democratic Party candidate elected in September in an upset of the Liberal Democrats, Japan's majority party for nearly all of the past 55 years. In televised speeches Thursday and Friday, Hatoyama defended his spending plans, which shift the government's focus from public works projects to direct payments to individuals. "Together with all of you, I want to build a better Japan, a new Japan,” he said at a news conference. “I have adhered to the principle that people matter more than concrete." But there are signs that the Japanese people are starting to have doubts about the Democrats. Hatoyama's popularity rating has slipped below 50 percent from a high of 71 percent after the election, the Times said, although that could be due in large part to an accounting scandal involving his party. The scandal has imperiled the Democrats ambition to win control of the upper house of Japan's parliament in midterm elections next year, the Times said, and appears to have affected negotiations with the United States on the future of the giant U.S. airbase on Okinawa.