Japan’s recovery from earthquake, tsumani may stretch its finances

Although Japan is widely considered to have the financial wherewithal to bounce back from the calamity that struck three weeks ago, analysts are beginning to wonder if shifts in global production patterns and changes in Japanese society will make the country’s path to recovery more difficult.
Central to Japan’s ability to bounce back is the capacity of its government to borrow seemingly limitless amounts of money at cheap rates, a gravity-defying phenomenon that has remained constant for more than two decades despite the country’s world-leading levels of public debt. With more than $10 trillion in loans outstanding, an amount equivalent to more than 200 percent of the country’s annual economic output, the estimated $300 billion repair bill does not seem so large. The country also sits on a trillion-dollar stockpile of foreign reserves, and confidence in Japan remains so entrenched that interest rates since the disaster have not budged.