Japan in the Same League as the PIIGS?
Japan will be forced to take austerity measures similar to those embarked upon in many European countries, but Prime Minister Naoto Kan’s five-month-old government has so far failed to take decisive action to get Japan’s economy back on track, Tobias Harris, author of "Observing Japan" said.
Watch the full interview with Tobias Harris here
“I would have expected them to have problems, but perhaps accomplish something even as they struggle with problems,” Harris said.
Japan’s justice minister resigned on Monday and a survey by the Mainichi newspaper released on Monday showed support for Kan's government at 26 percent, down 23 points from the previous poll in October.
Analysts have said Europe’s debt crisis could spread to Japan as a slowdown looms and the strong Yen damages exports. The crisis in the so-called PIIGS nations — the acronym refers to Portugal, Ireland, Italy, Greece and Spain — is far from over, they say.
“What Japan is struggling with is that the DPJ (Democratic Party of Japan) really did promise a lot took to power last year…It’s surprising in a lot of ways that they have been as ineffective as they have been,” Harris said.
“The best we can really hope for from the Kan government at this point is really marginal changes…If they actually somehow manage to get the Bank of Japan to try some more unusual approaches to putting money into the system, that might actually have some effect,” he said.
But Harris added that Kan’s government had not even succeeded in pushing through such changes.
“We’re not even getting that. This latest resignation shows you we’re not really able to get a direction out of Kan,” he said.
“When you look at what they’re spending money on, it’s entitlements and it’s social security particularly. And when you look at Japan’s demographic profile, you really wonder how they’re going to make those cuts,“ said Harris.
He said Japanese people had not yet taken to the streets in the way Europeans have because no budget cuts have been pushed through so far.
“They haven’t pushed to change the retirement system. Until that happens, I think it’s really an unknown about Japan’s political future,” Harris said.