Japan Leads the Way Down a Dark Hole
Derek Scissors /
Japan’s newly minted finance minister, Naoto Kan, seems an excellent choice to lead Japan on an expedited road to fiscal perdition. For those who argue the best way to deal with the coming financial crisis is to precipitate it quickly, Mr. Kan’s choice should be particularly welcome.
The governments of the industrialized world are almost uniformly embarking on a crash course in sovereign debt calamity. In raw dollar terms, the United States is leading with a budget deficit in 2009 of $1.4 trillion and even more expected for 2010 and thereafter. But for fiscal chutzpah, the Japanese are the clear leader, with a debt-to-GDP ratio over 200 percent and climbing fast.
Finance Minister Kan appears likely to extend Japan’s lead. A political operative with “little, if any experience in fiscal affairs or macroeconomic issues” according to the Financial Times, he is more prone to worry about fiscal stimulus than fiscal restraint. (more…)