Japan’s New PM Warns Nation at “Risk of Collapse,” Calls Public Finances “Worst of any Developed Country”

Japan’s new Prime Minister Naoto Kan addressed the dire economic conditions of his country during his first major speech, saying the nation was at “risk of collapse” due to its outstanding public debt.

Kan warned that Japan could be headed toward an economic crisis similar to Greece as the country’s debt has grown to twice that of its gross domestic product. That figure led Kan to label Japan’s public finances as the “worst of any developed country” and without financial restructuring the results would be catastrophic.

That restructuring could mean that several of the spending pledges made during last year’s election could be scrapped. Kan, Japan’s former finance minister, could also be pushing for a higher consumption tax, something the people have been fighting against.

At the heart of Kan’s fears is the country’s issuance of government bonds as a means of financing spending. Kan warned that if the public debt went untouched and the bond markets collapsed then the country may not have a way out.

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