Japan has never been a good place for the Bushes. Nearly shot down by one of their fighters and later vomiting in the lap of the Prime Minister made the country one of those places George Bush, Sr. would rather forget. Like his father before him, George W. comes to Japan at a crossroads in his political life. Having ridden the popularity of a war of revenge against terror he has seamlessly reached the heights of Presidential power, yet his power wanes at the hands of a sagging economy and the nagging specter of Enron.
With this as the backdrop, the challenge W. faces in Japan will be daunting and perhaps even greater than the challenges brought to the fore by the terrorist attacks of 9/11. Japan’s banking system stands on the precipice of a total collapse.
“If the Asian imbroglio does spread, it could lead to a world recession as severe as that of the early ’80s – the last time when world trade actually declined. It could spark currency crises in Brazil and other developing countries that could imperil banks in the United States and in Europe. It could also inspire governments to adopt the kind of monetary autarky and trade protection that prolonged and deepened the Great Depression of the 1930s.” These words from the New Republic in 1998 sound almost prophetic today. Over the past few months the world has seen the collapse of the Argentine banking system and a new crisis in Venezuela.
We are mired in a recession that is partially the hangover of the Asian Crisis combined with America’s crisis in leadership. Despite America lowering interest rates, Japan’s economic woes continue.
Currently, Japan is debating what measures to take to combat deflation and a 1.0% GDP contration for the year ending in March. The only real solution is for the Japanese government to take on public debt. However, this hardly seems an option when government debt is already 130% of GDP. PM Koizumi’s latest plan also includes measures to prevent a rush on banks by nervous savers when the Government caps an unlimited guarantee on deposits at ¥10 million ($147,600) from April.
If George W. Bush fails to help guarantee the liquidity of Japanese banks, the resulting failure may bring about a 1929 style global depression. A failure to act dooms the U.S. economy, at the very best, to the kind of long-term stagnation that Japan itself is experiencing. No doubt there will be many platitudes exchanged and the word ‘reform’ mentioned.
However, nothing will happen. Besides, reform in the Bush lexicon means an unconditional surrender to American Corporate Imperialism. Instead, expect another fine foreign policy failure: simply another one from the setting son.
ORIGINALLY PUBLISHED IN DEMOCRATIC UNDERGROUND