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发表于 2011-8-4 13:10:37
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VOX POPULI: Strong yen forces us to think about 'national creditworthiness'
Last fall, as the euro depreciated, a pizza delivery service in my neighborhood distributed fliers advertising it was passing on the benefits of the strong yen to customers. According to the flier, tomato sauce and cheese imported directly from Italy cost less, resulting in marginal gains. While informing consumers of price cuts, it boasted it was serving "the real thing." How clever.
Companies doing business abroad must be fretting over the ultra-strong yen. Exporters, not to mention corporations that lose tens of billions of yen when the Japanese currency rises by a single yen, must be tearing their hair out over the trend. Meanwhile, travelers going overseas are adding items to their shopping lists, and pizza joints are thinking about their next advertising campaigns.
At one point, the dollar-yen exchange rate came close to 76.25 yen, an all-time high recorded immediately after the Great East Japan Earthquake struck. The United States somehow managed to tide over the crisis of national bankruptcy and avoided an unprecedented debt default. However, there are still fears that it could face a lower credit rating. The U.S. economy remains shaky.
According to experts, despite the March 11 disaster, investors are buying yen because it is "less weak" than the dollar and the euro. Japan has more than 1,000 trillion yen in personal financial assets. Also, its consumption tax rate is still low. Be that as it may, the central and local governments have combined debts of nearly 900 trillion yen. Eventually, they will not be able to repay those debts with their own resources.
In the United States, Republican hard-liners promoting the Tea Party movement objected to the issuance of more government bonds right to the bitter end. I hear that Tea Party activists, who champion smaller government and oppose tax increases, are gaining so much ground that they may cause a stir in next year's U.S. presidential election.
A strong yen may provide us with a good opportunity to ponder "national creditworthiness." Although the March 11 earthquake pushed Japan's financial woes to the side, there is little time left for the government to carry out fiscal reform. How can we share the shrinking "pizza" of revenues that continues to shrink with a declining birthrate? Before Tea Party-like extreme views gain currency, I hope the pain of increasing taxes and cutting spending will be shared in a balanced way.
-- The Asahi Shimbun, Aug. 3 |
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