Japanese Analyst Argues That We Are Repeating Japan's Mistakes

Richard Koo from Nomura Securities is an expert on Japan's Lost Decade. In this article he claims that Obama's jobs bill is modest relative to the problems in the economy. Moreover, he expects that the GOP will only agree to the tax cut portion of the bill. We will not see much improvement in unemployment.

He also disagrees with economists who separate short term stimulus from moderate term fiscal consolidation. We should fix the economy before worrying about longer term debt to GDP ratios. He argues that Japan made the same mistakes that we are making. Government kept shifting from fiscal stimulus to fiscal consolidation and the economy see sawed back and forth. Japan has the worst of both worlds as a result. It has a slow growth economy and an extremely high debt to GDP ratio.