Japan: an economy in trouble

Japan: an economy in trouble(経済危機の日本)
The future could be dominated by the U.S. and Europe with the Japanese economy in decline.

Japan, the world's second largest economy, by the end of this year will have experienced a decline in its national output of 10 per cent from the peak in 2008.
Figures announced on Wednesday show that in the first three months of this year output fell by 4 per cent. This is the fastest rate of decline since the war; overall it is the biggest decline of any major economy since the U.S. economy contracted by a quarter during the Great Depression.
Japan's travails closely impact on us. It is a major locomotive of the world economy; its problems are everyone's.
Japan's output has now fallen so far that it has lost all the gains it made since 1992. Brutally, it has lost two decades. You have to shake your head at the horror of it - another sobering example of the dark times in which we are living.
Economists comfort themselves that the wost is behind. A lot of Japan's recent problems arose from a cataclysmic 26 per cent decline in its exports over the quarter as retailers and distributors around the credit-crunch suffering globe stopped ordering, and met what demand there was from stocks.
Japan, uniquely dependant on industrial export for its prosperity, was hit very hard. But now there are sings orders are picking up again as the "destocking" stops. Exports are steadying. On top there is a colossal $153bn stimulus package, focusing on stimulating demand for green products.
The big car firms report a surge of orders. Even the IMF believes the Japanese economy will decline less rapidly as the year wears on. The Japanese stock market, expecting the news, was hardly affected. Perhaps the crisis is yesterday's story. Wrong. The explainations for Japan's problems are unlikely to evaporate soon.
The first is that its economy was crippled during the 1990s and the first part of the 2000s by a dawn-out credit crunch. Banks had lent too much and were crippled by losses as the property market collapsed. With bank and corporate balance sheet badly hit, the economy got stuck in low investiment, low growth, low confidence doldrums. It is an awesome warning of what may happen to Britain, similarly sticken.
Matters improved over the last few years, thanks to Japan's powerful industrial exporters and the pick-up in demand from Asia and the U.S. But crisis-hit America is no longer a big buyer of Japanese and Asian exports.

Enormous Challenge

As treasury secretary Tim Geithner has said, over-indebted America is unlikely to become a big consumer again any time soon. Nor can Europe,beset by unemployment,fill the gap. Which presents Asia and Japan with an enormous challenge.
Japan has been the economy Asia has copied - high saving, high inbestment and high exports - along with a government which closely directs economic avtivity. This is the Asian model. But who is now going to buy all those TVs, cars, cameras and videocameras?
The only answer is the Asians themselves.
Which means they will have to save less and spend more - a diagnosis easier to make than to execute. Asians save because they don't have confidence in their governments, the tax base on which welfare is financed or on the stability of property rights. There are even fears about the region's political stability. So governments have to spend to compensate, which is what Japan's is doing on an epic scale. But this can only be a shortterm solution.
Over the next five years Japan and Asia face the economic fight of their lives,with protracted stagnation and social unrest very real prospects. The solution is an Asia Enlightenment, a more transparent, consumer-oriented capitalism. The biggest worry of all is that so few in Asia recognise the problem.
Unless it changes, the next 20 years will be even more dominated by the U.S. and Europe than last. (THE HINDU Friday, MAY, 22, 2009.)

今日の一言
日本の経済危機と政治危機はかなり致命的な段階にきています。それは、海外から見た方が明瞭に見えるのでしょう。最中の日本人、特に若者は見えているでしょうか？この経済危機・政治危機が。日本人が、アメリカ依存ではなく、アジアの中で新しい経済体系を作り出す為には、若者がもっと政治や経済に関心の目を高めて、新しい思考と力で日本を立て直していかないと・・・！