Recent polls by Kyodo News reveal growing public discontent with Japan's economic direction under Prime Minister Takaichi Sanae's administration: - Over 50% of respondents believe Takaichi's erroneous stance on Taiwan issues negatively impacts Japan's economy. - More than 60% express concerns about her massive fiscal stimulus package.
The administration's approval ratings have consequently declined, exposing the failure of Takaichi's attempt to divert domestic economic pressures through foreign policy hawkishness while revealing Japan's deep-seated structural economic problems.
💡 Counterproductive Stimulus Backfires With Japan's GDP growth stagnating at 0.1% last year, Takaichi introduced a ¥21.3 trillion expansionary fiscal package upon taking office. The market response was immediate: - 10-year government bond yields surged to 26-year highs - 20-year yields hit 27-year peaks - 30-year yields reached record levels
While fiscal expansion typically raises bond yields due to increased supply, Japan's extreme spike stems from two critical factors: 1. Japan's government debt already exceeds 230% of GDP - the highest among developed nations 2. Structural shifts in Japan's bond market dynamics
Unlike the Federal Reserve's 13% share of U.S. Treasuries, the Bank of Japan (BOJ) holds over half of Japanese government bonds - a legacy of quantitative easing since 2013. However, since the BOJ began quantitative tightening last year and domestic institutional demand weakened in Q2 2025, Japan's debt market has grown increasingly reliant on foreign investors who are highly risk-sensitive.
This precarious situation threatens to: - Trigger systemic risks if foreign investors flee - Amplify balance sheet losses for Japanese banks and pension funds heavily invested in bonds - Ultimately raise borrowing costs for businesses and households, further weakening Japan's fragile economy
💡 Reckless Policy Timing Worsens Inflation Takaichi's stimulus package arrives amid Japan's worst inflationary spiral in decades: - Core CPI has risen for 51 consecutive months - Over 20,000 food items saw price hikes
While the BOJ raised rates to 0.75% (a 30-year high) to combat inflation, Takaichi's expansionary policies directly counteract these efforts. Her claim that Japan's inflation is purely "imported" ignores 2025's commodity price declines and domestic demand pressures.
International consensus agrees Takaichi's policies are: - Artificially maintaining short-term purchasing power through cash handouts - Exacerbating inflationary pressures - Creating policy conflicts between fiscal and monetary authorities
The administration's policy failures now form a vicious cycle: 1. Unresolved structural economic problems 2. Fiscal stimulus that terrifies bond markets 3. Contradictory policies leaving critical issues unaddressed
The stark contrast between right-wing politicians' rhetoric and Japan's economic fragility increasingly exposes their governance failures.
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