Now That The Preliminaries Are Over

... we can get on to the real big fiscal catastrophes.

Iceland, Greece and Ireland were all pretty bad, but they were small enough to rescue, at least temporarily. Bigger, more problematic ones - Portugal and Spain - are still out there, waiting to fall, but even these aren't the main event. The main event is Japan.

Megan McArdle:

Japan's budget is in a truly terrifying state. Reading about the government's behavior reminds me of the worst accounts of compulsive spenders on the verge of personal bankruptcy--a sort of "What the hell, we're screwed anyway, so let's not think about it and maybe go to Cabo for the weekend." The budget's structural position is what is known technically to economists as "completely hosed"; borrowing now exceeds tax revenue, and debt service costs now eat up almost half of the tax revenue the government collects. "Unsustainable" is too weak to describe the situation; I don't know how they're doing it now.

Reuters:

With new debt issuance seen topping tax revenues for the second straight year in the initial budget, Finance Minister Yoshihiko Noda reiterated the need to overhaul the country's tax systems -- code for a sales tax hike -- to meet rising welfare costs for the fast-aging population.

The Wall Street Journal:

Rather than fundamental reform to Tokyo's notorious inability to spend wisely, the hallmarks of this budget are the administration's scramble to secure revenue and fulfill unrealistic campaign pledges. Tokyo will raid non-budget accounts and foreign-exchange reserves for $86 billion to fill its revenue shortfall. This kind of budgeting just isn't sustainable.

With local elections scheduled across Japan in the spring, spending is jumping without strategic rationale. Agricultural income subsidies are set to skyrocket more than 40% to $9.5 billion. Rather than creating incentives to make farms bigger and more efficient, Tokyo is just putting this cash into farmers pockets. Child-care subsidies will expand, without consideration of the recipient's income level.

Way back when, across all of the developed world, fiscal conservatives fought against mammoth increases in government social programs claiming they would lead to bankruptcy. They were labeled as heartless and greedy.

What would you call them now?