November 19, 2010

IT'S A BIT LATE IN THE DAY...:

Land of the Setting Sun: Can Japan Reverse Its Long Decline?: Back in the 1980s, Japan was an economic powerhouse and the envy of the world. But there appears to be no end in sight to its current decline, as jobs are lost, pensions cut and companies move overseas. The country's much-vaunted social cohesion is also disintegrating as people find themselves forced to rely on their own resources. (Wieland Wagner, 11/17/10, Der Spiegel)

Japan's decline began in the mid-1980s. The economy was overheated. In response to pressure from the United States, Tokyo was forced to substantially revalue the yen, making its exports more expensive. To offset the losses, the Japanese government pumped massive amounts of money into the economy, and the central bank drastically lowered its prime lending rate.

With the cheap money, the Japanese began speculating in stocks and real estate. The property where the emperor's palace stood in downtown Tokyo was supposedly worth as much at the time as the whole of California. And because terrestrial profits were no longer enough for them, Japanese developers seriously began planning cities in the ocean and on the Moon.

But then the Bank of Japan began feeling queasy about the boom and raised interest rates. This led to a massive crash on the Tokyo stock market, followed by a sharp decline in the real estate market. After that, Japan kept launching new economic stimulus programs to save what was left to save. In the process, it accumulated more debt in relation to economic output than any other leading industrialized nation.

The stimulus programs didn't do much good. Admittedly Japan is by no means Greece, which profited at the expense of its European neighbors. Instead, the Japanese government borrowed from its own thrifty citizens. The Japanese are now doing their best to save face. It is a dignified decline, but in the process Japan is in danger of using up its own reserves.


...but their only hope for a decent future would be massive immigration and Christianization. Their problems are cultural, not economic.

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Posted by Orrin Judd at November 19, 2010 6:45 AM
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