Japan held an emergency policy meeting to announce an agreement between the government and ruling parties to include a new economic stimulus package in the second supplementary budget for fiscal 2009. The original plan was for Y2.7 trillion budget and now this will be expanded. They are doing this because the economy is sliding back into deflation and the stock market had declined 1700 pts since August (it jumped abt 500 pts on this news).
This begs, if not screams, the question: will it really help?
It's a lesson for the United States to learn that continuous government spending doesn't not make/create/save jobs in the medium to long term. It takes the private sector to do that not the public. The public sector needs to provide the conditions by which the private sector can be incented to succeed. Higher spending begets higher deficits and higher taxes. It is the exact opposite of what needs to be done to the private sector.
This isn't new news by the way. One of the first US Treasury Secretaries understood this concept. Andrew Mellon in 1924 wrote, "The history of taxation shows that taxes which are inherently excessive are not paid. The high tax rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the government nor profit to the people."