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Dean Baker's commentary on economic reporting « Deflation Nonsense | Main | Washington Post Is on the Anti-Deficit Warpath: Leaves Truth Behind »
Trashing Japan to Push Deficit Reduction
Most of the elite definitely want the public to be scared about the deficit. They are constantly filling the newspapers and airwaves with the horrors of the huge debt. (Never mind that the reason we are running up huge deficits is entirely because these elites were too incompetent to see an $8 trillion housing bubble.)
The elites want to cut Medicare and Social Security. They also want a national sales tax. These measures will lead to serious declines in the living standards for middle class people, a group that has seen its wages stagnate for the last three decades.
Everything goes to push the anti-deficit agenda, including just making things up. In this category, the NYT has an article today telling readers how Japan is strangling under its enormous debt burden. At one point the article tells readers that: "Just paying the interest on its debt consumed a fifth of Japan's budget for 2008, compared with debt payments that compose about a tenth of the United States budget."
That would be news for the folks in Japan. They think that they only spend 11.2 percent of their budget on interest (page 4). (The interest burden peak in the U.S. at 16 percent in 1991.)
The article is full of shrill warnings about the dangers of Japan's deficit, but it includes almost no facts to support these warnings. For example, it quotes Carl Weinberg, chief economist at High Frequency Economics: "public sector finances are spinning out of control "” fast,... We believe a fiscal crisis is imminent."
The article tells readers that: "The fall in public and private savings could eventually reverse Japan's current account surplus, possibly driving up interest rates as the public and private sectors compete for funds. Higher interest rates would increase the cost of servicing the debt, and raise Japan's risk of default."
It continues: "In a worst case, Japan's currency could suffer as more investors switch away from Japan to other assets. And if Japan were to print more money and set off inflation to reduce its debt burden, the supply of yen would shoot up, lowering the currency's value further."
Of course the markets refuse to be as worried about Japan's collapse as the NYT wants them to be. The people who actually are putting their money on the line are willing to hold 10-year bonds issued by the Japanese government at interest rates just over 1.0 percent. As the article notes, the yen has been rising, not falling. And, Japan's main concern for over a decade has been deflation (price are again falling in Japan), not inflation.
The article even raises the terrifying prospect that Japan's current account surplus will turn into a deficit as its population ages. Actually, this is what would be expected. That was the point of running a current account surplus. This surplus allowed Japan to build up a huge supply of foreign assets that it can draw upon as its population ages.
In short, there is no story here. The NYT apparently doesn't want the U.S. to run deficits and it is prepared to fabricate stories about Japan to help push its agenda for the U.S.
--Dean Baker
COMMENTS (2)"The elites want to cut Medicare...". True, and Medicare's future is tied into the health care system's future.
The NYT doesn't seem to be the objective liberal sanctum that it's sometimes portrayed as. Along with this editorializing about the deficit, its coverage of health care reform has been atrocious. About a week ago (right after the AHIP report had been made public), the NYT ran a story about Congress's "legislation" failing to control health care costs. By "legislation" they were talking about the Baucus bill. That's right -- the only one (of five in the entire Congress) that doesn't include a public option, the main factor that's supposed to hold down costs. The NYT featured a ~500 word story about "controlling costs" that didn't even mention a public option *once*.
Here's the very misleading article: http://query.nytimes.com/gst/fullpage.html?res=9402E0DF163BF931A25753C1A96F9C8B63
Some home-brewed IMF therapy for the U.S. middle class.
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Dean Baker's commentary on economic reporting « Deflation Nonsense | Main | Washington Post Is on the Anti-Deficit Warpath: Leaves Truth Behind »
Trashing Japan to Push Deficit Reduction
Most of the elite definitely want the public to be scared about the deficit. They are constantly filling the newspapers and airwaves with the horrors of the huge debt. (Never mind that the reason we are running up huge deficits is entirely because these elites were too incompetent to see an $8 trillion housing bubble.)
The elites want to cut Medicare and Social Security. They also want a national sales tax. These measures will lead to serious declines in the living standards for middle class people, a group that has seen its wages stagnate for the last three decades.
Everything goes to push the anti-deficit agenda, including just making things up. In this category, the NYT has an article today telling readers how Japan is strangling under its enormous debt burden. At one point the article tells readers that: "Just paying the interest on its debt consumed a fifth of Japan's budget for 2008, compared with debt payments that compose about a tenth of the United States budget."
That would be news for the folks in Japan. They think that they only spend 11.2 percent of their budget on interest (page 4). (The interest burden peak in the U.S. at 16 percent in 1991.)
The article is full of shrill warnings about the dangers of Japan's deficit, but it includes almost no facts to support these warnings. For example, it quotes Carl Weinberg, chief economist at High Frequency Economics: "public sector finances are spinning out of control "” fast,... We believe a fiscal crisis is imminent."
The article tells readers that: "The fall in public and private savings could eventually reverse Japan's current account surplus, possibly driving up interest rates as the public and private sectors compete for funds. Higher interest rates would increase the cost of servicing the debt, and raise Japan's risk of default."
It continues: "In a worst case, Japan's currency could suffer as more investors switch away from Japan to other assets. And if Japan were to print more money and set off inflation to reduce its debt burden, the supply of yen would shoot up, lowering the currency's value further."
Of course the markets refuse to be as worried about Japan's collapse as the NYT wants them to be. The people who actually are putting their money on the line are willing to hold 10-year bonds issued by the Japanese government at interest rates just over 1.0 percent. As the article notes, the yen has been rising, not falling. And, Japan's main concern for over a decade has been deflation (price are again falling in Japan), not inflation.
The article even raises the terrifying prospect that Japan's current account surplus will turn into a deficit as its population ages. Actually, this is what would be expected. That was the point of running a current account surplus. This surplus allowed Japan to build up a huge supply of foreign assets that it can draw upon as its population ages.
In short, there is no story here. The NYT apparently doesn't want the U.S. to run deficits and it is prepared to fabricate stories about Japan to help push its agenda for the U.S.
--Dean Baker
COMMENTS (2)"The elites want to cut Medicare...". True, and Medicare's future is tied into the health care system's future.
The NYT doesn't seem to be the objective liberal sanctum that it's sometimes portrayed as. Along with this editorializing about the deficit, its coverage of health care reform has been atrocious. About a week ago (right after the AHIP report had been made public), the NYT ran a story about Congress's "legislation" failing to control health care costs. By "legislation" they were talking about the Baucus bill. That's right -- the only one (of five in the entire Congress) that doesn't include a public option, the main factor that's supposed to hold down costs. The NYT featured a ~500 word story about "controlling costs" that didn't even mention a public option *once*.
Here's the very misleading article: http://query.nytimes.com/gst/fullpage.html?res=9402E0DF163BF931A25753C1A96F9C8B63
Some home-brewed IMF therapy for the U.S. middle class.
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About Beat the PressDean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, including Plunder & Blunder: The Rise and Fall of the Bubble Economy, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and The United States Since 1980. Read more about Dean.
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Trashing Japan to Push Deficit Reduction
Most of the elite definitely want the public to be scared about the deficit. They are constantly filling the newspapers and airwaves with the horrors of the huge debt. (Never mind that the reason we are running up huge deficits is entirely because these elites were too incompetent to see an $8 trillion housing bubble.)
The elites want to cut Medicare and Social Security. They also want a national sales tax. These measures will lead to serious declines in the living standards for middle class people, a group that has seen its wages stagnate for the last three decades.
Everything goes to push the anti-deficit agenda, including just making things up. In this category, the NYT has an article today telling readers how Japan is strangling under its enormous debt burden. At one point the article tells readers that: "Just paying the interest on its debt consumed a fifth of Japan's budget for 2008, compared with debt payments that compose about a tenth of the United States budget."
That would be news for the folks in Japan. They think that they only spend 11.2 percent of their budget on interest (page 4). (The interest burden peak in the U.S. at 16 percent in 1991.)
The article is full of shrill warnings about the dangers of Japan's deficit, but it includes almost no facts to support these warnings. For example, it quotes Carl Weinberg, chief economist at High Frequency Economics: "public sector finances are spinning out of control "” fast,... We believe a fiscal crisis is imminent."
The article tells readers that: "The fall in public and private savings could eventually reverse Japan's current account surplus, possibly driving up interest rates as the public and private sectors compete for funds. Higher interest rates would increase the cost of servicing the debt, and raise Japan's risk of default."
It continues: "In a worst case, Japan's currency could suffer as more investors switch away from Japan to other assets. And if Japan were to print more money and set off inflation to reduce its debt burden, the supply of yen would shoot up, lowering the currency's value further."
Of course the markets refuse to be as worried about Japan's collapse as the NYT wants them to be. The people who actually are putting their money on the line are willing to hold 10-year bonds issued by the Japanese government at interest rates just over 1.0 percent. As the article notes, the yen has been rising, not falling. And, Japan's main concern for over a decade has been deflation (price are again falling in Japan), not inflation.
The article even raises the terrifying prospect that Japan's current account surplus will turn into a deficit as its population ages. Actually, this is what would be expected. That was the point of running a current account surplus. This surplus allowed Japan to build up a huge supply of foreign assets that it can draw upon as its population ages.
In short, there is no story here. The NYT apparently doesn't want the U.S. to run deficits and it is prepared to fabricate stories about Japan to help push its agenda for the U.S.
--Dean Baker
COMMENTS (2)"The elites want to cut Medicare...". True, and Medicare's future is tied into the health care system's future.
The NYT doesn't seem to be the objective liberal sanctum that it's sometimes portrayed as. Along with this editorializing about the deficit, its coverage of health care reform has been atrocious. About a week ago (right after the AHIP report had been made public), the NYT ran a story about Congress's "legislation" failing to control health care costs. By "legislation" they were talking about the Baucus bill. That's right -- the only one (of five in the entire Congress) that doesn't include a public option, the main factor that's supposed to hold down costs. The NYT featured a ~500 word story about "controlling costs" that didn't even mention a public option *once*.
Here's the very misleading article: http://query.nytimes.com/gst/fullpage.html?res=9402E0DF163BF931A25753C1A96F9C8B63
Some home-brewed IMF therapy for the U.S. middle class.
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About Beat the PressDean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, including Plunder & Blunder: The Rise and Fall of the Bubble Economy, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and The United States Since 1980. Read more about Dean.
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Archives October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007 February 2007 January 2007 December 2006 November 2006 October 2006 September 2006 August 2006 July 2006 June 2006 May 2006 April 2006 Blog Roll Angry Bear Brad DeLong Brad Setser Calculated Risk Econbrowser Economist's View Economonitor Econospeak Greg Mankiw Macroblog Marginal Revolution New Economist Nouriel Roubini Real Time Economics Tim Worstall Links FAIR Economic Policy Institute Center for American Progress Bureau of Economic Analysis Congressional Budget Office Bureau of Labor Statistics Support independent media with a tax-deductible donation. Renew your print subscription or e-subscription. Get an e-subscription for $14.95. Give the gift of political insight. Send The American Prospect to a friend. Change your email address or street address. YES! I want to receive The American Prospect — the essential source for progressive ideas. Explore The American Prospect's award-winning investigative journalism and provocative essays in a free trial issue. Continue receiving The American Prospect at only $19.95 for a one-year subscription - a savings of 60% off the newsstand price! First Name Last Name Address 1 Address 2 City State AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY ZIP Email Should you decide not to continue receiving the magazine after the initial free issue, simply write "cancel" on the invoice and you will not be billed. Advertise | Donate | Subscribe | Archive | About The American Prospect | Privacy Policy© 2009 by The American Prospect, Inc. | Privacy Policy | Permissions and Reprints
var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-3812902-1"); pageTracker._initData(); pageTracker._trackPageview(); _qacct="p-f5EylkOYLD59Y";quantserve(); _qacct="p-da12qeST0GrE6";quantserve(); var _rsCI="us-bpaww"; var _rsCG="0"; var _rsDN="//secure-us.imrworldwide.com/"; var _rsPLfl=0; var _rsSE=1; var _rsSM=1.0; var _rsCL=1;"The elites want to cut Medicare...". True, and Medicare's future is tied into the health care system's future.
The NYT doesn't seem to be the objective liberal sanctum that it's sometimes portrayed as. Along with this editorializing about the deficit, its coverage of health care reform has been atrocious. About a week ago (right after the AHIP report had been made public), the NYT ran a story about Congress's "legislation" failing to control health care costs. By "legislation" they were talking about the Baucus bill. That's right -- the only one (of five in the entire Congress) that doesn't include a public option, the main factor that's supposed to hold down costs. The NYT featured a ~500 word story about "controlling costs" that didn't even mention a public option *once*.
Here's the very misleading article: http://query.nytimes.com/gst/fullpage.html?res=9402E0DF163BF931A25753C1A96F9C8B63
Some home-brewed IMF therapy for the U.S. middle class.
Post a comment
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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, including Plunder & Blunder: The Rise and Fall of the Bubble Economy, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and The United States Since 1980. Read more about Dean.
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© 2009 by The American Prospect, Inc. | Privacy Policy | Permissions and Reprints
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