Lawrence Lindsey, chief economic adviser to Republican presidential nominee George W. Bush, suggested Friday that a Bush administration would seek fiscal reconstruction in Japan rather than the additional fiscal stimulus that the current administration is demanding.
"It is much more plausible given the debt levels in Japan and the strong political forces which shape the allocation of resources in the state sector, that Japan's primary problem is capital misallocation," Lindsey, a former Federal Reserve Board governor, said in a speech at a Washington think tank.
"The massive debt of Japan will become increasingly difficult to service unless the rate of returns on Japanese saving is increased," he said.
He urged Japanese politicians to take decisive action to rebuild the deficit-ridden state finances.