New Japan Prime Minister Warns Country May Default


Gus Lubin
Business Insider
June 11, 2010

  • A d v e r t i s e m e n t
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When he was Japan’s finance minister, Naoto Kan advocated loose monetary policy to end two decades of deflation.

But since his sudden promotion to prime minister, Kan has been crying out about public debt levels. Today, he even used the signal word for austerity: Greece.

“Our country’s outstanding public debt is huge. Our public finances have become the worst of any developed country. We cannot sustain public finance that overly relies on issuing bonds. As we can see from the eurozone confusion that started in Greece, there is a risk of default if growing public debt is neglected and trust lost in the bond market.

No one knows if he can pull off the mythical trick of reducing government spending while stimulating private sector spending. Kan may be overplaying the similarity Greece to get people behind fiscal reform, a Credit Suisse Japan analyst tells The Guardian.

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