Japan's public debt worsening to scary proportions
Less than a week before a key national election, the Japanese government is left with a public debt almost twice as big as the Gross National Product.
Yomiuri Shimbun : Fixing state's finances new govt's main task
Quote:
Originally Posted by Yomiuri
The government is using about 1 billion yen in taxpayers' money every single hour to pay interest on government bonds. This amount of debt-servicing is nearly equivalent to the sum of money needed to build a primary school.
The combined total of long-term debts incurred by the national and local governments is expected to exceed 770 trillion yen at the end of the current fiscal year. How should this nation deal with the world's largest fiscal deficit? Needless to say, overcoming this crisis requires reform that will entail pain in the form of cuts in annual government expenditures combined with efforts to secure revenue.
Japanese politicians being self-concerned and corrupted as they are, they have always postponed major reforms and left to their successors the task of looking at a way to limit expenses and pay back the already gigantic government's debt.
I doubt that much will be done to tackle this very serious issue, as nothing has been done for decades and Japanese politicians aren't known for their initiative in solving problems. Historically, all the major political changes that happened in Japan were caused by foreign pressure and civil wars. The last one was the US occupation of Japan after WWII. Nowdays there is nothing to push Japan to change, so it won't.
What worries me is that the Japanese State is already near bankruptcy, and if the Japan Post is privatised as the PM wishes, it will only worsen the government's solvability. It is years that observators wonder if the Japanese State will really go bankrupt. Every year, more debts accumulate, and more creditors are left with less hope of ever getting paid.
There are talks of raising consumption taxes, but that won't suffice to balance the budget. In fact, the debt is so bad that raising all taxes by 10% and cutting the government's budget to avoid any further debts, would take almost 20 years to pay back the current debt, while putting enormous strain on the economy and individual wealth.
In other words, Japan has created money artificially during the past few decades, and this money has accumulated in the form of debts, both public and corporate. If Japanese banks had to conform to the same rules of accounting as in Western countries, most of them (and all the big ones) would be bankrupt. The same is true of the Japanese government. So, the money deposited by individuals in Japanese banks (including the Japan Post Bank), is virtual money that only exist because those banks are not allowed to go bust, but in fact are completely insolvable. That means that Japanese people do not possess a fraction of the financial assets they have on paper.
The Japanese GDP per capita has been decreasing a lot since the bubble burst in 1990. Japan that once had one of the highest GDP/capita now ranks 17th in the world. If we consider the public debt and insolvanility of the banks, the real GDP per capita should be much lower than what it is already estimated now.
There was no economic miracle. The Japanese economy rose quickly because the country was in ruins in 1945, and hard work to rebuild it could only mean economic growth. After that, so much money was created artificially through real estate and financial speculation and the rise of the yen, that Japan became rich... on paper. The fact is that most people still lived in ugly, non-insulated cardboard or wooden houses (some with or corrugated iron walls or roofs) that would be called hovels in Western countries. On top of that, Japanese houses are much smaller, and salaries per hour are also considerably lower due to the very long overtime hours required by most big Japanese companies. The GDP per capita of all other prefectures than Tokyo is 1/3 to 1/2 of Tokyo's. This creates an illusion of wealth for visitors coming to Tokyo, while in fact, Japan itself is far from being a rich country, even just on paper.
This rant is not to disparage Japan itself, but the people who caused the country to put itself in this abominable situation, i.e. the Japanese government. This is probably what happens when a country want quick economic growth but tries to hamper democracy (see this thread, especially the summary in post #4).
Vain politicians tried to manipulate the international image of Japan by trying to boost the GDP by overspending and generating a collosal public debt. Then, the same government failed to properly manage urban planning in the following ways :
1) by allowing electric lines to spoil the scenery and cause serious hazard in case of earthquake.
2) by giving permits to poorly constructed building that fall apart in typhoons and eartquakes, causing many deaths to this day.
3) by allowing asbestos to be used in housing and train stations until 2005 (see thread Asbestos used in at least 20% of Japanese homes, causing lung cancers for thousands of people, and probably millions more to come.
4) by allowing industries to dispose of toxic wastes in rivers and next to rice paddies, causing numerous fatal diseases.
5) being to lenient of medical malpractices, encouraging the isolation of lepers or people with mental disorders, etc.
As long as the Japanese people will not understand the importance of politics in their daily lives, they will continue to elect people who care so little about them that they allow these dangerous things to happen. Japan may be a safe country regarding crime, but it certainly isn't regarding the general environment, be it natural disasters or human-induced disasters.
Council eyed to undertake fiscal reform
The tentatively named fiscal reconstruction promotion council, to be headed by the prime minister, will aim to reduce central and local government debts, which will have soared to 774 trillion yen, or more than 150 percent of gross domestic product, by the end of fiscal 2005, to about 40 percent to 70 percent of GDP, a figure close to those of other industrialized nations, the officials said.
http://www.yomiuri.co.jp/dy/national...23TDY01002.htm
Maciamo pointed out that it would take 20 years with a 10 % tax increase to wipe out the debt. Does anybody have detailed white papers on the explanation of this public debt and why japan's government,economy hasn't collapsed yet? Finding good reading resources on japan's economy is quite difficult.
