Rakesh wrote:
I thought the structural deficit is a measure of what the deficit would have been had there been full employment however defined. What this has to do with the sustainability of more deficit spending (already jeopardizing the credit standing of the Japanese govt) is unclear to me.
Me:
Sure, but given that definition, the structural deficit indicates the potential for fiscal recovery--i.e Japan's ability to pay, given its current resources, used to capacity.
I don't disagree that both the U.S. and Japan are in positions that are unsustainable, in the long run. I don't bet on crises to precipitate political changes in either the short or long run. Crises can be used for such things, of course. But people still have to be organized, beforehand, for this to happen. Besides, it's not who predicts the crisis before hand who wins; it's who can win the post-crisis struggle over the meanings attributed to it.
All best Christian