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Monday, January 23, 2012

Japan's Debt Issues, Budget Balancing Etc

Here is an excellent write up on the issues facing Japan. The article is from Bloomberg titled, "Japan May Miss Debt Goal Despite Tax Hikes" Question: If raising taxes is the solution, then why would the Japanese miss their objectives? Question 2: If raising taxes was the solution to the debt and/or deficit problem, why not simply raise taxes each time there is a spending issue by the Government?
 The Japanese are in a precarious position. For starters they have a relationship with China. According to this article, "Japan looking to buy Chinese Government Bonds", China is experiencing a slow down in there economy, and Japan is attempting to purchase some of the Chinese Government's debt. Important Note: Japan has been China's biggest trading partner since 2009. The Japanese also have much of the United States Government's debt also. As the US is experiencing a financial correction, the Japanese are feeling the pinch.

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