BigBull,
This does not bode well for BOOM 2K, would you care to critique?:
By Scott Stoddard, Associated Press Writer
TOKYO ( AP ) - Japan's ballooning public debt, made worse by wasteful public works spending, is a time bomb that could wreck the world
economy, two Japanese academics said Friday.
"We are looking at a danger signal blinking near and bright," said Akio Ogawa, a lecturer in the Graduate School of Public Policy at Tokyo's Chuo
University.
Ogawa and Takayoshi Igarashi, a professor of law at Tokyo's Hosei University, spoke at the Foreign Correspondents' Club of Japan about the need to
sharply reduce both public works spending and the debt if Japan is to regain its economic might.
In an attempt to jump-start the economy, the government has lavished funds on bridges to sparsely populated islands, concrete linings for rivers and
roads to nowhere, they said. Rather than helping the economy or the people, the spending mostly benefits politicians, bureaucrats, and businesses,
Ogawa and Igarashi said.
The second-richest country in the world is also the world's most indebted nation. Its public debt exceeds $5.5 trillion, or 130 percent of gross national
product, Ogawa said.
Japan racked up debt mostly over the past decade as the government, urged on by the United States, tried to spend its way out of its longest economic
slump since World War II.
In 1997, Japan spent more than $402 billion on roads, bridges, ports and other public works projects - more than the United States, Canada,
Germany, France, Italy and Britain combined, Ogawa said.
"Now we face a dire choice between huge tax increases or hyperinflation to help reduce, if not wipe out, the debt that has already got out of control,"
he said.
The last time the government raised taxes, in April 1997, the economy sank into recession and dragged down the rest of Asia. The alternative, printing
more money, would reduce the value of savings and force up prices, hurting consumer demand and ultimately the economy.
Either way, Japanese purchases of everything from Italian suits to American-made computers and Asian commodities would suffer.
"It's an accident waiting to happen," said Matthew Poggi, an economist at Lehman Brothers ( Japan ) Ltd. |
