Japan's new Prime Minister Yukio Hatoyama holds unrealistic goals that are more worrisome than any of the economic plans President Barack Obama has proposed, says NYU economist and RGE Monitor head Nouriel Roubini.
There are far fewer political checks on Hatoyama's ability to pursue them.
“Like Mr. Obama, he's had to come to grips with enormous immediate challenges, beginning with the need to kick start a stalled economy,” Roubini writes in The Wall Street Journal.
However, Obama must deal with a hostile Republican party, while Hatoyama’s party has built a strong single-party majority in the lower house and has coalition partners who dominate the upper house.
Obama’s “innate caution and his willingness to compromise are likely to serve him well,” Roubini, says.
“To spare Japan an unnecessarily turbulent 2010, Mr. Hatoyama needs to become "Hatobama," a pragmatist ready to disappoint ideological allies and assuage centrist fears of a policy agenda his country simply can't afford. Japan's recovery is riding on it.”
Japan's public debt is approaching 200 percent of gross domestic product — by far the largest debt-to-GDP ratio in the industrialized world, Roubini notes.
And effectively, it now has a no-party system and a ruling coalition of mostly new faces with far fewer connections in the business world.
The Japanese government’s economic growth plan includes creating millions of new jobs and achieving average growth of 2 percent over the next decade, the Financial Times reports — bold targets considering that the government forecasts the Japanese economy will shrink 4.3 percent in nominal terms in the year to next March.
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