TOKYO (majirox news) — Japan’s coffers are emptying. Japan’s Finance Minister Jun Azumi said the nation could run out of money by the end of October. This would prevent spending on salaries, pensions and other day-to-day expenses. When a country is running out of money, it is usually possible to borrow money by issuing government bonds.
“However in Japan’s case, the current political situation has stalled,” said Takeshi Koyama, a professor at Akita University. “This means laws allowing bonds to be issued have not been passed yet. Japan is already the holder of the world’s largest national debt.”
The ruling Democratic Party of Japan controls only the lower house of the parliament. It needs the cooperation of the opposition controlling the upper house to pass the bills.
“After the fierce political infighting to pass laws to double the rate of the consumption tax, such cooperation seems unlikely,” Koyama said. “And a split in the ruling party by rebels only makes matters worse. Although it is ultimately unlikely that the country will run out of money.”
However, the opposition may feel more encouraged to fight. Although in the past they relented in the end, and voted in favor of the country’s deficit financing bill.
Shuji Hirose, president of AZ Company, said, “The real problem in Japan is that we are missing leadership. At this critical time, all the political parties need to come together, including businesses and citizens, and act more like a team. We need to closely watch what is happening during the next three months.”
Japan is not alone in its distress – both Greece and the United States face problems, the latter, like Japan, deadlocked by a seemingly inflexible political standoff. However, unlike the U.S. with its fixed-term legislature, Japan has the option of a snap mid-term election to break through the deadlock, and some commentators are seeing this as a likely possibility.
This is yet another worry for Prime Minister Noda, whose plate is already full with other matters, including the recovery from last year’s disasters.