The first cry of “wolf” came in 1975 when, during the post-oil shock recession, Japan did what countries do in recessions: it ran a deficit. Nonetheless, the Ministry of Finance (MOF) issued a “declaration of fiscal emergency.” Three years later, as deficits continued, the MOF said that, unless Japan quickly restored budget balances through tax hikes and spending cuts, it would “collapse.” In 2010, it told Prime Minister Naoto Kan that, unless he raised the consumption tax, Japan could experience a catastrophic debt crisis like the one wracking Europe. So, when Vice Finance Minister Koji Yano recently criticized new Prime Minister Fumio Kishida’s budget package, insisting that his deficit spending was like “the Titanic heading into an iceberg,” he was simply continuing a long tradition.
Read Full Article »
