Japan to go broke by October? Standoff threatens to 'collapse' budget

Reuters via MSNBC ^ | July 6, 2012 | Reuters

[John W]

TOKYO - Japan's government could run out of money by the end of October, halting all state spending including salaries, pensions and unemployment benefits, because of a standoff in parliament that has blocked a bill to finance the deficit.

The deficit financing bill, which would allow the government to sell bonds needed to fund almost half of the budget, has languished in parliament as the ruling Democratic Party tussles with opposition parties that can use their control of the upper house to reject legislation.

"Without this bill, the budget will collapse," Finance Minister Jun Azumi said on Friday, pleading for cooperation from the two largest opposition parties.

Japan is not the only developed nation that is staring at an imminent fiscal crisis. Greece's debt-strapped government could run out of money within weeks unless it secures a 31.8 billion euro ($39.42 billion) tranche of bailout funds from the European Union.

The U.S. economy is facing $4 trillion worth of expiring tax cuts and automatic government spending reductions at the end of the year, and a standoff in Congress makes the chance of a compromise over the so-called "fiscal cliff" look dim.

[EQAndyBuzz]

There is no standoff in Congress. The Democrats in the Senate havn’t done anything in 4 years and there is no reason for the Republicans in the House to bail Obama out of this.

[Bikkuri]

Ping

(I don’t watch TV here, so I am a bit behind the times.. Either of you have any info on this?)

[Ronin]

As near as I can tell, the root is the DPJ plan to raise the consumption tax to 10%, which was opposed by the Ozawa wing of the party, and caused the split. My gut feeling is that Ozawa is not really that opposed to the tax, it’s more that he and his cohorts do not want to see Noda’s faction and its allies successfully pass it, because that would strengthen their control of the party apparatus.

OK, now apparently Ozawa and his gang have left the party and are even talking about forming their own, but that is not being viewed very favorably by the public, who are more than a little tired of their grumpy, old-school LDP-style, back-scenes power plays.

The bottom line is the tax increase is necessary. Maybe it wouldn’t have been if the government had not done all those stupid “pump priming” infrastructure projects in the 90’s, but that’s beside the point. I’m not looking forward to the increase anymore than anyone else is, but it’s time to bite the damn bullet and do it.

Ozawa and his cronies should sit down and have a nice hot cup of STFU.