An adviser to Japan's prime minister, Naoto Kan, has told him to decentralise power from Tokyo, to avoid annihilation.
Professor Takayoshi Igarashi of Hosei University who was appointed a special
adviser to the Cabinet on population issues, days before the catastrophic
earthquake, has advised Prime Minister Kan to reduce the role of the capital city to
avert an even greater calamity.
Prof. Igarashi is proposing a reconstruction package of at least ¥20trn ($246bn).
Japan has a net (the gross is over 200%) public debt of about 110% of GDP but crucially it funds about 97% of it internally.
American economists, Carmen and Vincent Reinhart, wrote last week: "Thankfully, Japan has a war chest of liquid assets at its disposal: Its authorities have been carefully stockpiling foreign exchange reserves (mostly US Treasuries) for years. At present, this stock is worth more than $1trn, or slightly below 20% of GDP. To rebuild, the logical thing is to cash in some of this horde."
American economist, Robert Pozen of the Brookings Institution wrote (Brookings' link) in the Financial Times that Japan faces one of the worst demographic situations in the world.
He said a logical response would be for Japan to allow the immigration of significant numbers of young families from other parts of Asia. But Japanese officials have historically resisted immigration in order to maintain a homogeneous culture.
He added: "Finally, Japan’s political establishment is still dominated by rural constituencies, despite electoral reforms a few years ago. This political domination has led to excessive government spending in rural areas on bridges and other construction projects, which have done little to boost Japan’s economic growth."
The Prime Minister wrote on his blog in early March that a taskforce team within the Cabinet has prepared a project to eliminate childcare waiting lists for 26,000 children, as part of the government's drive to make work and child rearing more compatible.
He said that "Professor Igarashi has been energetically providing recommendations regarding public works and the revival of local areas as well as, among other things, the extremely long-term policy issues of the nature of politics and public administration geared towards overcoming a society with a declining population."
Economists at US investment bank, Morgan Stanley, said in a commentary last week that Japanese GDP could contract by between 1% and 3% in calendar 2011, which would constitute a shortfall of 3-5% compared to the MS pre-quake forecast of +2%. For 2012, the team looks for GDP growth in a range of -1% to +3%, compared to a pre-quake 2012 forecast of 1.9%.
Stricken Nuclear Plant
NHK Television has reported that a Japanese
government spokesman has pledged all-out efforts to contain high-level radiation
at the damaged nuclear power plant in Fukushima.
Work to control the Fukushima Daiichi nuclear reactors was once again forced to stop because of high levels of radiation. CNBC's Allison Browne reports:
Greater damage to Japan's infrastructure could mean greater economic growth proposes Takuji Okubo, chief Japan economist at Societe Generale:
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