Key political risks to watch in Japan


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Japan spends half of its tax income on servicing its debt. Each year it adds more than the combined gross domestic product of Greece and Portugal to its debt pile, and the big risk is that while Japan today can still borrow domestically at very low rates, delays caused by political gridlock could leave it unable to do so for much longer.

Not a pretty picture. Be nice to think there is a strong group of young leaders waiting in the wings with the smarts and determination to turn around Japan before it is too late. But as long as folks like Ozawa are pulling the political strings, the odds of the situation improving dramatically are not great. Too bad.

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While I understand that inflation is a crazy problem over in Japan, they really need a way to work on the debt. I believe I read that almost all of Japan's debt is owed to itself.

I believe in you guys. I know Japan can get better with this issue.

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About tax.

Japan is creditor of USA.

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In a deflationary environment, the debt is not a problem. The problem will come as the world recovers, probably after 2016. Most likely Japan will be able to benefit from a decreased yen but the problem will be that may Japanese companies have relocated factories overseas. The profit may sit there and will not help Japan reduce it's debt. Only time will tell if Japanese businessman are more businessman or Japanese. As for the ruling Democratic Party, they are probably finished because of their stand to restart the reactors more than the increase in taxes.

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The biggest problem for Japan:

All their debt is from savings. People put their money in the Japan Post, and the Japan post buys J-bonds. But when people start taking money out of the J-Post, then there's going to be alot of pressure on the debt. So long as the people putting money into the J-Post is slightly more than people taking money out (a slight growth in debt) there's no problem. But current demographics dictate otherwise.

Older folks will start spending their savings, while younger, working people have less to spend. That's going to mean a negative flow of savings. Which means Japan needs to find another place to borrow money. Since they pay much less on debt that other countries, this is going to be a problem. The only thing they can do is print money, or monetize the debt, but that could lead to runaway inflation.

Japan is truly between a rock and a hard place. A 5% tax increase won't do diddly.

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herefornow Jul. 03, 2012 - 08:54PM JST. Not a pretty picture. Be nice to think there is a strong group of young leaders waiting in the wings with the smarts and determination to turn around Japan before it is too late.

In Japan, you hear regularly about the end of good political leadership in our time, but it seems to me that the incidence of good leadership is probably about the same now as it was few decades ago. Sometimes it's easy to believe that our perception to the contrary is the fault of the media or our modern methods of communication. I think not. There have always been a leader who makes use of popular prejudices and false claims and promises in order to gain power and their voices were as loud in the public places then as they are now. It is difficult to recognize some of the truly great leaders in Japan until long after the smoke has cleared. Outstanding public leadership is often shaped by circumstances that we would not want to occur.

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