Dogs and Demons_ Tales From the Dark Side of Japan - Kerr [114]
In 1990, a cartoon in a Japanese newspaper featured two couples, American and Japanese. The American man and wife, dressed in designer swimwear, were guzzling champagne as they sat in the whirlpool bath of their large, luxurious apartment. In the companion cartoon, a Japanese wife was hanging laundry out on a tiny veranda while her shirtsleeved husband read the newspaper in a cramped kitchen. Under the American couple the caption read «World's Largest Debtor Nation,» and under the Japanese «World's Largest Creditor Nation.»
Since then, the Americans have gone on living well, and the Japanese have gone on sacrificing, but by 1996 their country had become the world's largest debtor nation. Adding in so-called hidden debts buried in Ministry of Finance special accounts, Japan, with a national debt approaching 150 percent of GNP, has no relief in sight, as budgets, set by government ministries on automatic pilot, continue to climb. The Ministry of Finance's support for banks and industry through the manipulation of financial markets has had high costs. Interest rates of 1 percent or lower have dried up the pools of capital that make up the wealth of ordinary citizens: insurance companies, pension funds, the national health system, savings accounts, universities, and endowed foundations. The prognosis is for skyrocketing taxes and declining social services.
Besides the central government, local units across the nation, from heavily populated prefectures to tiny villages, are drowning in red ink. By 1998, thirty-one of Japan's forty-six prefectures were running deficits averaging 15 percent of their total budgets; six prefectures had reached the crisis level of 20 percent, at which point the central government had to step in and rescue them. Of these, Osaka Prefecture, reeling from a string of failed waterfront projects, is basically bankrupt, surviving on emergency cash infusions from the central government; its cumulative debt already topping ¥3.3 trillion, Osaka has been running annual losses of ¥200 billion per year since 1997. However, Osaka could still lose in the race to become the biggest prefectural bankruptcy, for the municipality of Tokyo also met disaster at the waterfront, and its shortfall for fiscal 2000 is three times larger than Osaka's, and growing.
Quantifying Japan's debt crisis is not easy, because its debts are so well disguised that nobody knows the exact figure. In a special pamphlet on the national debt, the Yomiuri Shimbun reported: «In addition to the general budget, there are 38 special accounts and the Zaito program, known as the 'second budget,' as well as debts of local governments. All of these are intertwined with one another, and have become a bloated monster.» Here is one estimate: In 1999, revenue shortfalls for the official «first budget» came to ¥31 trillion, an astonishing 37.9 percent of expenditures. Measured as a percentage of national product, Japan's deficit came to 10 percent of GDP, jumping right off the scale when compared with the OECD average of 1.2 percent; the nearest competitor for big-deficit spending among advanced industrial nations was France, at 2.4 percent of GDP Adding long-term bonds, by 1999 Japan's cumulative debt had risen to ¥395 trillion, amounting to 72 percent of GDP (the United States' gross federal debt, in contrast, comes to 64 percent of GDP). But this is not all. We need to take into account the shortfalls of municipal and prefectural governments, which come to ¥160 trillion. Add this to the national debt and the total jumps to ¥555 trillion, approximately 97 percent of GDP.
There is more. «Hidden debt» from the JNR Resolution Trust and Ministry of Finance budget manipulations; Zaito loans to bankrupt agencies such as the Forestry Agency, the Highway Public Corporation, and the Housing Public Agency; and additional trillions of yen in off-budget short-term «financing bills» brought