U.S. Must Prevent Yet Another ‘Made in America’ Catastrophe (Mainichi Shimbun, Japan)
Jul 29th, 2011 | 2 responses
The normally retiring newspapers of Japan, the country that holds the second largest amount of U.S. debt, are letting out some of there inner tigers in reaction to the prolonged debt ceiling debate. This editorial from Japan’s Mainichi Shimbun implores American lawmakers to act responsibly so as not to plunge the world into another major financial crisis.
The Mainichi Shimbun editorial says in part:
It is of course natural for politicians in democratic countries to look toward the next election. That is particularly true of members of the U.S. House of Representatives, who have to face the voters every two years. These lawmakers tend to constantly play to their constituents to improve their chances of retaining their seats. For Republicans who swept to a majority in the House in the last midterm elections, this means taking tremendous pressure from the conservative grassroots movement the Tea Party, which helped propel the Republican Party to victory and is dead set against raising the debt limit.
However, protecting the national interest and the full faith and credit of the dollar should be a far greater priority. An agreement on raising the debt limit is urgent, as is the necessity of drastic cuts in the deficit. A half-hearted deal would invite a downgrade of U.S. debt, perhaps triggering a short-term crash in the value of the dollar, long-term hikes in interest rates and plummeting stock prices around the world.
Less than three years since the Lehman Brothers collapse sparked a financial crisis that nearly tipped the globe into another Great Depression?, it is unacceptable that the world may soon be plunged into another ‘Made in USA’ financial catastrophe.
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2 Responses to “U.S. Must Prevent Yet Another ‘Made in America’ Catastrophe (Mainichi Shimbun, Japan)”
“Less than three years since the Lehman Brothers collapse sparked a financial crisis that nearly tipped the globe into another Great Depression?, it is unacceptable that the world may soon be plunged into another ‘Made in USA’ financial catastrophe.”
Japan isn’t a shining example of debt management either. Their government is floating one the greatest debt-to-GNP ratios ever, but only because they’ve been able to borrow more off of their own banks and citizens. Of course, they’re dealing with the same demographic problems that the rest of the world is, so that ability to borrow from their citizens is coming to an end.
Of course, the fact that their debt is mostly internal means that their crash isn’t going to have as much impact on the global financial system, but it will still affect the global economy.
The real disaster comes from the elaborate schemes, like the derivatives markets, which make the global financial system so unstable, not the disaster that triggers its downfall.
Not only that, but Japan engaged in colossal public-works spending (the kind that would make the Rachel Maddows and Paul Krugmans of this country drool, or be otherwise physically blissful), and they still had a “lost decade” of deflation and stagnation. (Note that part of this may be the aging in Japan that outdoes ours and even Europe’s in the future, potentially.)
Overspending and accruing increasing amounts of debt is not in the national interest, incidentally.