From Stratfor’s daily Global Intelligence Briefing:
The Japanese rightly point to the fact that they have experienced very real — and very strong — growth in the past three years. But they shy away from mentioning that their government is still running massive budget deficits. For the 2004 fiscal year, the annual budget deficit hit a record of 36.6 trillion yen ($344.4 billion), or 45 percent of the total budget.
Eventually interest rates will have to rise, and even a 1 percent increase in Japan’s debt servicing would add about $50 billion — more than the country’s entire defense budget — to Japan’s annual financing costs. The current recovery is nothing more than a flash in Japan.
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