Japan has long had a two-tier economy: a robust export sector and a comatose domestic economy. With the yen at a high level and trade volumes generally falling, the export sector has gone spectacularly into reverse gear, taking overall growth with it. From Bloomberg: Japan’s economy shrank at an annual 12.7 percent pace last quarter, […]
Read more...I must confess to having read only a bit of economist Axel Leijonhufvud’s writings, but what I have seen, I have liked very much. Leijonhufvud’s current post at VoxEU does a very good job of looking at the economic mess the US is in and assesses policy options. It is a remarkably straightforward piece. Most […]
Read more...Your humble blogger has said that rationalizing and recapitalizing the banking system is essential for recovery. Economists like Ben Bernanke attribute Japan’s failure to dig itself out of its hole to not being aggressive enough in terms of fiscal and monetary stimulus,. Yet Japan did a great deal on both fronts. The biggest difference between […]
Read more...A reader chided me for not making note of the truly dreadful factory output figures released last Thursday, which showed a fall of 9.6%. I have to confess that I have fallen into “Japan bad news” syndrome, in that I expect bad news out of Japan and therefore did not focus enough on the details. […]
Read more...When the Federal Reserve went “all in” as wags liked to put it on December 17, with its declaration that it would use “all available tools” to fight looming deflation. The bond and currency markets both took note, with the dollar falling sharply before rebounding and mortgage interest rates falling (nicely done, to get much […]
Read more...In part because the Japanese corporate bond market is no where near as deep and large as its US counterpart, Japanese rating agencies hold far less sway than Moody’s and Standard & Poor’s. Nevertheless, the idea that Japan should write down its vast holdings of Treasuries and support US infrastructure spending (albeit with a few […]
Read more...One of the ugly features of the Great Depression that in many (but not all) cases worsened the severity of the contraction was that countries adopted “me first” policies with little regard to their broader ramifications. The poster child of this pattern is Smoot Hawley. Although there is some dispute among economists as to whether […]
Read more...US economists have relentlessly harangued the Japanese for their supposed mismanagement of their post bubble era, which has lead to nearly 20 years of low growth, borderline deflation, with a not-much-discussed, robust export sector. Along with others, we complained in the early days of the Fed/Treasury emergency response that they were taking one of the […]
Read more...A comment in the Financial Times, “Prudent Asia is unlikely to bail out the west,” by David Piling, provides a badly needed reminder: societies watch out for themselves first. And the way they define their best interest may not correspond with what we think is good for them. Forgive us for repeating ourselves, but we […]
Read more...A story on Bloomberg, “Q Ratio Signals ‘Horrific’ Market Bottom, CLSA Says,” argues that the global equity market bottom will be well below the recent lows, but also thinks we may not see it until 2014 as the current pump priming measures hold off deflationary pressures for a while. Note that Gary Shilling, who was […]
Read more...The Nikkei and Topix are marginally in positive territory as of this writing (the Nikkei up a bare five points) retracing earlier gains. The proximate cause appears to be a downbeat revised GDP report. Stocks initially appeared to shrug off the bad news, taking momentum from the Euro/US rally, but upon reflection, have (for the […]
Read more...We have been mystified at the utter silence on behalf of our friendly foreign funding sources at their willingness to be patsies to continue buying Treasuries when the outlook for the dollar is far from rosy. The US’s funding needs are going to escalate sharply due to the need to pay for rescue programs. And […]
Read more...Nearly 20 years of stagnant to falling wages, threadbare social safety nets, and no returns on savings has produced a retiree class in Japan struggling to make ends meet. Good reason to worry at the sight of the US cribbing heavily from the Japanese playbook. From Bloomberg (hat tip Ed Harrison): More senior citizens are […]
Read more...A Wall Street Journal article, “Japan Worries It Faces the Return of Deflation,” contained an argument I found unconvincing: In the U.S., some economists say deflation may occur if market conditions deteriorate much further and job losses proliferate. But Teizo Taya, an adviser for Daiwa Institute of Research and a former policy board member of […]
Read more...The Japanese officialdom signaled an interest in a cheaper yen when the Nikkei breached 25 year lows. But the concern was not the level of the yen per se, but trying to use a weaker yen (it had run up to over 92 to the dollar) as to a desperate effort to shore up the […]
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