Obama’s plan for an economic recovery in Europe is simple: abandon austerity measures and concentrate on growth. The real message is “everything will be fine after the next election: just kick the flexible can down the road”. Sentient people know that spending money that you cannot repay is theft. Rationalizing growth over austerity only allows politicians to collect more tax revenue; it does not pay down the debt. Even if this was a valid course of action, when did any politician pay down debt in Washington since Thomas Jefferson? The reality of wishing for a better future in Japan is shown below.
Fitch Ratings cut Japan’s sovereign credit rating Tuesday, citing the nation’s rising debt and credit risk.
The rating agency downgraded Japan’s long-term foreign and local currency issuer default ratings to A+ from AA and AA-, respectively, with negative outlooks for both.
Andrew Colquhoun, head of Asia-Pacific Sovereigns for the rating agency, said the downgrade reflects “growing risks” from the country’s “rising public debt ratios.”
Fitch predicted the Japanese government’s debt will reach 239% of gross domestic product by the end of the year, “by far the highest for any Fitch-rating sovereign.”
The rating agency also criticized Japan for not being aggressive enough in reining in its debt.
“The country’s fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk,” said Colquhoun, in a statement.
The yen continued to weaken against the U.S. dollar, falling nearly 0.5% to ¥ 79.70 early Tuesday. The Japanese currency is down nearly 4% against the greenback so far this year.
But the rating agency praised Japan for maintaining “exceptional financing flexibility” and its ability to “fund itself at low nominal yields.”