Rearranging the deck chairs on Japan's sinking ship
Bloomberg News / Tuesday, February 11, 2003
Call it the "Titanic Deck Chair Bond" - a new government-financing plan that may do more harm than good to Japan's economy, extending its 12-year malaise.
...In order to buy the [new Japanese] bonds, consumers, in all likelihood, will withdraw money from the postal savings system and from banks. Money going from postal savings into the new bonds is a wash, fiscally speaking; postal system officials put the funds in government debt anyway. So do banks.
Here is the risk, though: If consumers who are worried about the solvency of banks rush into these securities, it could accelerate the flow of funds from the private sector to the public sector.
