AKB48 when they aren't selling Japanese government bonds. Wikimedia Commons.
AKB48 when they aren't selling Japanese government bonds. Wikimedia Commons.

The headline isn’t a joke or a line from TheOnion.com, but an ad campaign Tokyo has used since 2002 to seduce households, single or otherwise, to help finance the developed world’s largest debt burden.

The first sex-sells-bonds effort saw supermodel Norika Fujiwara appearing, scantily clad, in a barrage of television and magazine pitches suggesting girls fall for guys who buy government bonds.

It reappeared in 2009, when Tokyo hired actress Koyuki, who starred alongside Tom Cruise in The Last Samurai, to wink at would be bond-buyers.

Still of The Last Samurai. Photo via Twitter
Koyuki in movie still of The Last Samurai in which she didn’t say: “Would you please buy a government bond, Mr Samurai.” Photo via Twitter

In 2010, the ads appeared in taxis declaring “Women have a thing for men who own JGBs!!”

In 2012, Tokyo tapped AKB48, a wildly popular girl band, to gin up sales with their miniskirts and come-hither looks.

Japan might stimulate less eye-rolling and better results if it employed its female masses differently.

Rather than use them as props to sell government IOUs, why not coax them into the labor market to help Japan lower a debt burden more than twice the size of the economy?

A population shrinking as fast as Japan’s would typically import replacement talent. It shrank by nearly 1 million in 2016, while Japan’s borrowing campaign is increasing apace. A strong aversion to immigration makes that unlikely.

In the meantime, that disconnect is a clear and present danger to financial stability. Any jump in bond rates (10-year debt yields 0.6%) would increase Tokyo’s repayment burden exponentially, sending the yen and Nikkei stock average reeling.

A US$10 trillion debt, an aging population and a negligible birthrate could conspire to spook bond traders at any moment.

Read: By paying women less is Japan deepening its own deflation?

This unholy trinity of risk has long made investors like Jim Rogers in Singapore wary of buying Japanese debt.

“There will be no Japanese,” he’s warned in the past. “Who will pay the enormous debt?”

In recent years, short-sellers like Kyle Bass of Hayman Capital Management circled Japan’s aging economy. To be sure, those betting on a Japanese bond crash aren’t making any money these days, but the demographics-and-debt trajectory isn’t comforting.

The good news, say economists like Nicholas Smith of CLSA Asia-Pacific Markets, is that Japan enjoys two demographic cushions to buy some time on the debt front.

One is a surplus of highly-skilled retirees companies can rehire at fractions of their previous salaries. The other: an underemployed female population that could not only staff the economy, but help increase productivity and economic growth.

As Goldman Sachs estimates, gross domestic product would get a 15% boost if the female participation rate matched that of men, about 80% (it’s now about 66%).

As Goldman Sachs estimates, gross domestic product would get a 15% boost if the female participation rate matched that of men, about 80% (it’s now about 66%).

Even half that positive jolt would help Tokyo do something it’s been trying to do for 20 years: grow its way back to fiscal health.

Supply-side reforms – like the deregulation Shinzo Abe promised –are needed to wean Tokyo off its addiction to fiscal pump-priming and monetary largess. But faster growth is vital, too.

Deflation, remember, makes servicing debt more difficult.

It reduces tax revenues, business investment and household demand. Pulling more women into the workforce could help stabilize prices and set the stage for debt reduction.

Unfortunately, the zeitgeist is debt reinterpretation. Prime Minister Abe’s team is tweaking measurement parameters, including targeting the debt-to-GDP ratio, rather than focusing on net reduction.

It just means debt managers are free to expand the denominator – and the optics – to avoid difficult cuts to spending and services.

Read: Tokyo Governor Yuriko Koike – Japan’s real female role model

What can’t be tweaked, though, is the harsh reality that Japan is running out of workers. Well, male workers at least.

Enticing more women into the labor market could have a shock-absorbing effect on Japan’s debt structure. Question is, when will Tokyo fully employ it?

It’s great that the Abe administration added 400,000 childcare spots since 2012. Yet it’s a drop in the proverbial bucket in a 127 million-person nation still buckling under a shortage of daycare facilities.

Nor does that address the prohibitive costs. For many families, high daycare costs and the low pay from irregular work make the stay-at-home mom option more appealing.

It’s time for bolder, broader and, yes, sexier policies to address work-life imbalances that are making Japan’s debt burden harder and harder to fix.

William Pesek is a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” Twitter: @williampesek

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