Guardian reporter Justin McCurry weighs in with an interesting commentary on Japan’s role in the financial turmoil currently roiling across the globe.
Justin argues that Japan’s anemic stimululs pacakge, a product of Aso’s predecessor, is “the wrong answer to the wrong question.” Didn’t I hear the same comment during my Ph.D. defense?
The comments are interesting, and I encourage FROG readers to login and leave more comments. One commenter argues that “the fundamentals of the Japanese economy are sound” so that panic selling and other rash, short-term behavior doesn’t matter. The next commenter, in a perfect textbook example of divergent perspectives on the same data, denounces the Japanese government for gambling with taxpayer yen, and seems to say that if the government doesn’t intervene more forcefully, everyone SHOULD withdraw funds and otherwise bring about a new and improved Japanese banking crisis . . . Anyway, post your comments at the Guardian.
I don’t see much of a point leaving a comment there, but it seems pretty obvious to me that Japan’s financial crisis isn’t internal: it’s based on an entirely rational concern about the collapse of the American consumer market. The best thing they could do would be to inject capital into the US market, preferably through stimulus checks to Japanese studies scholars…..
Earl Kinmouth and Richard Katz were recently discussing the comparison between the US crisis and Japan’s prior bubble on SSJ. I don’t know if you all were reading that, but it was interesting. Their conclusion was fairly similar to Jonathan’s–that declining US demand would be crippling to everyone in East Asia, so it’s in their interest to give us money (especially me). One thing worth mentioning is that the funds required to bail out US debt, however calculated, are a far smaller fraction of the US GDP than what Japan was facing after its bubble burst. Therefore, US readjustment is presumed to be quicker and less painful than the “lost decade,” even if we manage to cripple the ROK, ROC, PRC, and Japan along with us. I’m no economist, but it’s worth thinking about.
AWM