The Modern Tokyo Times

International news and neglected issues

EU financial crisis: Japan gives the IMF $60 billion and America gives not a dime

EU financial crisis: Japan gives the IMF $60 billion and America gives not a dime

Pierre Leblanc and Lee Jay Walker

Modern Tokyo Times

The government of Japan is extremely worried about the financial crisis which continues to beset the European Union (EU). This factor meant that Japan promises to support the International Monetary Fund (IMF) to the tune of an additional $60 billion dollars. The United States under President Obama is to provide not one cent to the new initiative which is meant to restore stability and freshness during a time of genuine uncertainty.

Indeed, Japan showed its international responsibility because this nation became the largest contributor outside the non-eurozone. Yes, it wasn’t the United States, China, or India – this applies to the so-called economic superpower and the two nations which hog the limelight for being the future economic superpowers. Instead, it was Japan once more which showed its economic potency despite receiving negative press in this field for decades.

In recent times it is clear that the debt of the United States is spiraling under President Obama irrespective if he blames the leader before him. Yet prior to recent times many past American leaders like Bill Clinton lauded it over Japan. After all, the American model was meant to be dynamic, transparent, and truly global. However, just like the EU and “the new way” both appear to be out of touch and in need of “a new remedy.”

Unemployment in the United States remains around the 9% per cent mark and in nations like Greece and Spain, it is out of control. Irrespective if all the above nations bounce back and the unemployment figures come right down, it is clear that they could never match Japan. After all, two negative economic decades on the whole in Japan but despite this the unemployment figure always remained very low in comparison.

Therefore, the Japanese economic model is clearly concerned about creating jobs, maintaining social order, investing in neglected areas, and maintaining social cohesion. On the contrary, Western capitalist nations run up huge unemployment figures in such a short space of time. Also, the gap between the rich and poor and social deprivation is much higher in nations like the United States and United Kingdom.

Of course, Japan is beset by internal problems related to the declining birth-rate and other important factors. Yet despite the political quagmire in Japan the bureaucratic system maintains stability even when the “boat is rocking.”

Let us also remember that Japan just promised $60 billion dollars despite the tragic and terrible events of March 11, 2011, when the devastating tsunami created havoc. This means that Japan is still facing the consequences of this tragedy, a very high yen, and an energy crisis because of the nuclear factor in Fukushima. However, despite everything, it is Japan which is dipping into its reserves in order to help the EU during its “hour of need.”

In a previous article by Modern Tokyo Times it was stated that “Ironically, despite Japan “throwing away two wasted decades” and the terrible events of March 11 when the earthquake unleashed a potent and deadly tsunami; the government of Japan stepped in and bought more of Europe’s debt in order to boost the European Union. However, given the huge economic crisis generated by the tsunami and ongoing radiation crisis, it is difficult to imagine America coping with such a strong currency given all the problems which are happening in Japan. Not only this, Japan increased its support of America during this trying time by buying more American government bonds and providing the European Union in 2012 can come up with a serious economic policy, then Japan promises to help.”

“Given this, it appears that Japan keeps on ticking while America keeps on selling more of its debt and given the lack of government policy directed towards the weakening dollar, it does appear that the government of America is not responsive to the international community. Therefore, the currencies of Japan and Switzerland are paying a high price because the value of the Japanese yen isn’t based on market fundamentals.”

Eammon Fingleton a writer at Forbes commented that “This is not the first time that Japan has stepped up to the plate as lender of last resort to the world financial system. At the height of the global panic in 2009, the Tokyo Ministry of Finance more or less single-handedly rescued this system when it injected $100 billion into the IMF.”

He further comments that “Let’s note that a balance sheet has two sides. The Japanese government’s liabilities may be large. But it is important to take a look at its assets before resorting to extravagant denunciations of its financial policy. What is clear is that the Tokyo Finance Ministry is increasingly borrowing from the Japanese public not to finance out-of-control government spending at home but rather abroad. Besides stepping up to the plate to keep the IMF in business, Tokyo has long been the lender of last resort to both the U.S. and British governments. Meanwhile it borrows 10-year money at an interest rate of just 1.0 percent, the second lowest rate of any borrower in the world after the government of Switzerland.” 

Japan remains to be an enigma but clearly this nation is much more vibrant than it is led to be believed by many within the international press who focus on economics. Therefore, once more it is Japan which is “stepping up to the plate” while America provides not one single extra cent despite the economic convulsions hitting the EU.

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