UNLIKE THE US, JAPAN HAS BAD DEFLATION...:

Japan government loses upper house majority: Exit polls (AFP, Jul 11, 2010)

The election result -- the first ballot box test since Kan's party swept to power under a previous leader in a landslide poll last summer -- complicates his ambitious reform plans for the world's number two economy.

When Kan took office a month ago as Japan's fifth prime minister in four years, he pledged to restore the nation's vigour after two decades of economic malaise and to whittle down a huge public debt mountain.

The one-time leftist activist also promised to strengthen the social safety net for the rapidly ageing society and raised the prospect of tax hikes to pay for it all -- a gamble that backfired badly on election day.

...which makes the idea of raising taxes sheer lunacy.

Posted by Orrin Judd at July 11, 2010 7:44 AM