Japan under growing international pressure for austerity measures

[Hannah Bell]

The International Monetary Fund (IMF) last week again called on the Japanese government to rein in public spending to address its spiralling debt. Prime Minister Nanto Kan is also preparing to increase the consumption tax this year, despite the risk of public opposition of the kind that erupted in response to austerity measures in Greece, Spain and France.

The IMF named the US and Japan as the two biggest economies in the G-7 that needed to slash public spending, or their bonds would be dumped by investors. “In advanced economies where fiscal sustainability has not been a market concern, credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment,” the IMF declared in its “Fiscal Monitor” report.

The IMF’s warning came six months after it called on Japan to triple the consumption tax from 5 percent to 15 percent... Japan’s national debt will hit 204 percent of gross domestic product (GDP) this year... Standard and Poor’s (S&P) last week cut Japan’s long-term debt rating to AA- from AA, three levels below the highest AAA credit rating...

Although 95.4 percent of Japan’s debt is held domestically and it has external assets of 225 trillion yen, the banks and big business are demanding that the government act just as ruthlessly as its counterparts in Europe...

http://www.wsws.org/articles/2011/feb2011/japa-f02.shtml


As the article says, most of Japan's debt is held internally & was borrowed at very low interest rates, notably from domestic savings held in its Post Office savings system. Here's the backstory:

Japan Post ran the world's largest postal savings system and was often said to be the largest holder of personal savings in the world: with ¥224 trillion ($2.1 trillion) of household assets in its yū-cho savings accounts and ¥126 trillion ($1.2 trillion) of household assets in its kampo life insurance services, its holdings account for 25 percent of household assets in Japan. Japan Post also held about ¥140 trillion (one fifth) of the Japanese national debt in the form of government bonds.

On October 1, 2007 Japan Post was (supposed to be) privatized... ...privatization plans are currently in limbo -- reportedly will take place by 2017.

http://en.wikipedia.org/wiki/Japan_Post.

As a private corp it would be the world's 6th-largest.

http://money.cnn.com/magazines/fortune/global500/2010/snapshots/10344.html

Modern Japan was built on the people's savings; they didn't get much & it looks like they're going to get less in the future.

How the IMF can demand a certain level of taxation when most of Japanese borrowing is internal, I have no clue. The downgrade in ratings sounds like extortion.


Here's some neo-lib astroturf outfit purporting to measure the "freedom" of various postal services with an "Index of Postal Freedom".

Typical thing: postal services are most free when they're run by unaccountable private corporations.

http://www.postalconsumers.org/postal_freedom_index/Japan_Post.shtml


When I lived in japan, people talked about how great the service was & how diligent the postmen were. The stories were similar to the ones I used to hear about the post in the US when I was a kid.

[Dawson Leery]

1. Extortion indeed.

[Ramulux]

2. Japan's political system is fucking insane

If you ever think our system is bad, take a look at how people get elected over in Japan. It might be the most obviously corrupt political system in any industrialized democracy in the world. It may not compare to Afghanistan, but it makes us look awesome.

[Kuroneko]

4. Why?

Could you provide more information.

[Bonobo]

5. Easy to say, hard to back up.

Do you have anything to support such an over the top statement as this?

[Cali_Democrat]

3. When in doubt....

Print baby, print!

[Kuroneko]

6. The service was great

But is going down. As it's usual with privatization.

And it's also not a surprise that the IMF push a regressive tax as the solution.

[JDPriestly]

7. What industrialized nations are not forced to initiate austerity measures?

It just does not make sense that virtually every nation that has been considered "rich" is now being required to institute austerity measures. There is something wrong with this picture. Maybe free trade really doesn't work after all. Do you suppose? Why does the IMF force it down everyone's throat. Who gave the IMF that authority in the first place?

[Hannah Bell]

8. something wrong with this picture for sure. i'd like some answers to some of those questions too.