"The Japanese economy must restructure, and must deal with her loans, her
bad loans," President Bush told Asian reporters before his recent trip to
Japan, South Korea and China, according to an article in the Feb. 18 New
York Times. The article did not mention that the U.S. borrows mainly from
Japan.
So are Japan’s loans to the U.S. bad? If so, it stands to reason that U.S.
borrowing from that nation could cause future problems. Further, a Japanese
economic restructuring, which the president wants, could have unclear
effects on the U.S. economy.
What’s one current purpose of U.S. debt held by Japanese lenders? That
would be to fund the U.S. trade deficit, the difference between what America
buys and sells worldwide.
A past purpose of Japanese lending was to fund public deficit spending on
the U.S. military during the 1980s. Public indebtedness rose sharply during
the Reagan era. This was done to protect Americans from the threat posed by
the Soviet Union, which fell as the 1990s began.
It has been said that history repeats itself, firstly as a tragedy and
secondly as a farce. Take President Bush’s current plans to increase
funding for military/security spending to keep Americans safe from the “axis
of evil”—Iran, Iraq and North Korea. This will also help to push the
federal budget from surplus into deficit.
A Feb. 19 Knight Ridder article cast doubt on Japan’s ability to, in part,
cope with its indebted banking sector. Why? Because “Japanese culture
favors cozy political and personal ties over clear-eyed business decisions.”
Is American culture different? Corporations that command the Bush
administration would suggest otherwise.
When it comes to reporting world affairs, the U.S. corporate news media
deprives Americans of a critical context. This can weaken the political
consciousness of the general population. Independent media is one cure for
this condition.
In the meantime, Japan has had a post-financial bubble economy, with slow/no
growth, for roughly the past decade after years of strong growth. One
outcome has been fewer opportunities for profitable investments. This
helped to spur Japanese banks’ involvement in financial speculation, a
factor in the nation’s current economic stagnation.
Some have said that the U.S. economy may have entered a post-bubble crisis
that began with the dot-com bust of technology stocks in spring 2000.
Currently, faked earnings and sour loans are emerging, working their way
through the nation’s economy. Like Japan, U.S. financial fragility has
followed an economic expansion.
So goes the cycle of financial peaks and valleys in rich nations such as
Japan and the U.S. In this respect, they are more alike than not, contrary
to what passes for news and information in America’s “free press,” owned and
operated by a handful of media corporations that are big and getting bigger.
What goes around comes around. So it is for capitalism, which has been a
global system from its beginning. The effects of expansion, speculation,
recession and stagnation are far-reaching.
We haven’t heard the last word on U.S. Japan relations.
Seth Sandronsky is an editor with Because People Matter, Sacramento’s progressive newspaper ssandron@hotmail.com
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