Monday, October 09, 2006

North Korea. Economies of Japan vs. USA

Long term, it is bad news that North Korea has had a successful nuclear test. Short term I am more concerned about the unstable government in Pakistan with their existing nuclear weapons (General Musharraf took control 8 years ago in a military coup, has never faced an election, and is unpopular in his own country - a country with few natural resources, increasing population pressures, etc. - who gets these nuclear weapons if the Musharraf government falls?) Also, many people in the Middle East and Europe are concerned with Israel's nuclear weapons. I believe that it is time for our government to start one-on-one negotiations with countries like Iran, Syria, and North Korea. Public "negotiations" are seldom effective - we need closed door sessions with top level diplomats (private, so egos do not get in the way).

On happier news: Japan is "officially" recovered from its severe 15 year economic slump. Less happy is a comparison between the assets that Japan had to survive economic hard times that we in the USA do not have (and make no mistake, a severe economic downturn will hit us in the future):
  • Personal savings: citizens in Japan had relatively large personal savings that they could rely on for living expenses (consumer savings in the USA is close to zero, considering people who increase their debt with second loans on their homes, etc.)
  • Japan had low defense costs (the USA spends as much money on defense than the next 24 countries in the world combined)
  • Japan had healthy industrial infrastructure with modern factory equipment (the USA is way behind the curve in updating basic infrastructure like factory equipment and our road and highway systems)
  • The government of Japan did not have the huge deficits that the government in the USA has.
  • The government of Japan did not have the huge foreign debts that the government in the USA has.

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