http://www.nakedcapitalism.com/2009/02/japan-on-edge-of-abyss.html THERE HAS NEVER BEEN DATA THIS BAD FOR ANY MAJOR ECONOMY â EVEN IN THE GREAT DEPRESSION. December industrial production came in down 9.6%, worse than the METI forecast. It is now down almost 21% year over year. METI forecasts a further 4.7% decline in February. The inventory to production ratio soared again. Maybe METI will be correct. If it is, Japan industrial production will have fallen 28% (non annualized) in four months. It will have fallen by a third in about a year. Nothing in the history of major nations compares. A 28% decline in four months would be more than half of the entire decline in U.S. industrial production over the 3 years and nine months of the U.S. Great Depression. It would be a greater decline in four months than in any 12 month period in the Great Depression in the U.S. We are literally looking at the unimaginable. (I am attaching the U.S. industrial production index from the Great Depression for comparison). ITâS A DEPRESSION IN JAPAN â ALREADY â PURE AND SIMPLE.
China, Japan and all of Asia will get out of this crisis way way ahead of the US & Europe. The main problem being, western economies have collapsed and since they've been producing Zilch and living off debt, it's almost impossible for them to recover. On the other hand, Japan and the rest of Asia are collapsing due to a super strong Yen and the collapse of exports (demand in the west) If China & Japan concentrate their stimulus plans on their own countries and stop buying US treasuries, The whole transfer of power will occur within 10 years. I'm excluding Canada since economically speaking it's a well managed grocery stores, they seek commodities, produce nothing and have a good fiscal standing. your average supermarket. So , in 1 year China, doing super well Japan, stabilized Korea, still struggling US, Germany, England : Deep shit Canada : benign existence still in effect. useless, worthless.
What exactly is super well? Factories filled with sweatshop slaves, contaminated water & air, death vans & persecutions? China is no fairy land, contrary to the rah rah China articles by clueless journalists. It's not getting out of this mess unscathed.
We've seen examples of emerging markets a) with no domestic consumer market to speak of b) GDP primarily comprised of infrastructure spending and exports going into steep contractions (-8%, -12% peak to trough) rather than "normal" G7 recessions (-3%, -4%). Let's see how this one turns out. The entire decoupling theory basically imploded like a house of cards. What will happen to China with demand for their exports evaporating and domestic infrastructure spending contracting faster than their stimulus can possibly re-inflate it?
It's surprising, but anything less than 8% or so growth in China would be regarded as a recession and of huge concern for the government. Due to the ongoing massive influx of people from the rural areas into the cities, China needs the hyper growth in order to accomodate the millions of new workers. These individuals can't (or won't) just go back to their previous jobs, which was basically subsistence farming. The government is concerned that this will lead to huge unemployment and political unrest. So, any idea that China will be doing "super well" at single digit growth doesn't take into account the country's political fragility. As for Japan, if "stabilized" means the same circumstances that defined the lost decade of the 90s, then I'd much rather be the US and go through a 3 yr painful recession.
Another succinct, excellent post. By the way - I'm not so confident Japan can be fairly classified as being in a 'full, fledged, real deal, depression,' BUT, it's definitely on the way there if the world's consumers don't come around VERY SOON.