A couple of decades ago, when the post-war baby boom generation was in its prime earning and tax-paying years, governments had a chance to guarantee the survival of their financial systems.
But they blew it. Instead of controlling spending, running surpluses and banking the proceeds against the inevitable retirement of millions of boomers, most chose other priorities, whether military, social or (in the US case) both guns and butter. The result, in virtually every developed economy, is pretty much the same: Massive debts and little spare cash heading into the demographic tsunami. Now there's no mathematically feasible way to slow down spending and borrowing, since retiree healthcare costs will eat any conceivable fix and still be hungry. Japan, with the world's oldest population - and not coincidentally the most indebted government relative to GDP - is leading the stampede towards the cliff:
Japan's Fiscal Discipline Wavers as Aging Pressure Mounts
(Bloomberg) - Japan looks set to surrender one of its most effective tools for curbing social spending as aging pushes up health, pension and eldercare costs. Key advisers to the finance ministry recently dropped a recommendation to cap annual increases in social spending at 500 billion yen ($4.6 billion), suggesting instead that limits be calibrated with aging costs, without offering details. They also favored a five-year delay in the government's target for achieving a surplus in the primary balance, a move that won support from advisers to Prime Minister Shinzo Abe this week. With the government's mid-term economic policy plan to be released later this month, here's a look at key metrics in Japan's battle to get its finances in order. They show economic growth has boosted tax receipts and narrowed the deficit, but that government debt is still piling up.Aging Costs Swell
While social spending is the main driver
