I received an interesting email today from a friend, Chris, with a thought-provoking similar situation to the current US Bailouts in the works.
In the decade of the 90′s, Japan went through a similar major downturn in their economy. And, – they reacted with a similar answer: Bailouts. Stimulus packages and spending packages, largely on infrastructure, with some tax cuts. Here is an excerpt from that article:
Between 1992 and 1995, Japan tried six spending programs totaling 65.5 trillion yen and cut income tax rates during 1994. In January 1998, Japan temporarily cut taxes again by 2 trillion yen. Then, in April of that year, the government unveiled a fiscal stimulus package worth more than 16.7 trillion yen, almost half of which was for public works. Again, in November 1998, another fiscal stimulus package worth 23.9 trillion yen was announced. A year later (November 1999), yet another fiscal stimulus package of 18 trillion yen was tried. Finally, in October 2000, Japan announced yet another fiscal stimulus package of 11 trillion yen. Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen, and each failed to cure the recession. What the spending programs have done, however, is put Japan’s government in poor fiscal shape. The “on-budget” government spending has caused public debt to exceed 100 percent of GDP (highest in the G7), and even more debt is apparent when the “off-budget” sector is included.
From my perspective down on the street, dealing with everyday Atlanta and Georgia citizens as we all try to simply manage our personal and business finances, and our mortgages, I would say that this spending bill / stimulus package before congress is definitely not the right move. I see a lot of political gain in the short run for many elected officials. But long term for the country; well, there is not a lot there.
Related posts:
