Japan: Moody’s cuts credit rating over deficit concerns

24th August 2011

The Guardian reports that the ratings agency was concerned at both Japan's debt mountain, and its "rapid turnover of prime ministers".

Moody's decision came within hours of the Japanese government's announcement of a $100bn (£60bn) support package to businesses struggling to export due as a result of the yen's strength (FT.com paywall) .

Five different men have held the job of prime minster since the credit crunch began in August 2007 and this is seen by Moody's as having had prevented the government from turning "long-term economic and fiscal strategies into effective and durable policies".

Naoto Kan, the current prime minister, is expected to resign next week.

Mindful Money's economist blogger Shaun Richards writes that the re-rating came out of the blue.

"I have had contact with a Japanese economist  over the past few years who keeps assuring me that changes of Prime Minister is a  regular feature of Japanese life! But that Japan in many ways carries on regardless perhaps in a model that Belgium may be aping."

 

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