In my earlier post, I stated that Japan's current-account surplus can vanish in one of two ways: either Japan can consume more (which it won't because of debt and demographics), or it can (over)produce less. That is true. But when the adjustment happens is not set in stone.A casual observer might think that Nakagawa Shoichi's …
Tag: economic crisis
The accounting reaper cometh (Noah Smith)
A specter is haunting East Asia. Consumption is falling in the world's "deficit" countries, as American and British consumers rebuild their balance sheets. The global current-account and capital-account imbalances are thus coming under immense strain. An accounting identity states that for the imbalances to vanish, one of two things must happen in the "surplus" countries: …
Just a flesh wound
Speaking in the lower house's budget committee on Monday, Aso Taro said, "If you compare our economic conditions to other countries, our wounds are shallow."Naturally I immediately thought of nothing so much as this:I think Jun Okumura is on to something when he writes that the prime minister isn't a "total nincompoop," just in his …
A twenty years’ crisis
"Japan is an economy that is almost certainly producing well below its productive capacity - that is, the immediate problem facing Japan is one of demand, not supply. And it gives every appearance of being in a liquidity trap - that is, conventional monetary policy appears to have been pushed to its limits, yet the …
Aso calls for a new Japan
Prime Minister Aso Taro, having had his second stimulus package pass the Diet Tuesday, appeared before the Diet on Wednesday to deliver his latest policy address.Rhetorically, the address contains few surprises. In the opening sections, in which Mr. Aso addressed the principles behind his policies. He spoke of the "once in a century economic crisis" …
Tax rebellion averted?
The LDP appears to have forged a truce in the incipient war over writing the timing of a consumption tax increase into law.In the best LDP tradition, the LDP leadership has decided to muddle the message of the bill. The LDP has produced a draft with language that calls for implementing "essential legislative measures by …
Before the deluge
After an abbreviated recess, the Diet will reconvene today for its 2009 ordinary session.The situation facing Aso Taro, his party, and his country is dire, and growing darker by the day. The latest development is the tent village — is it appropriate to call it an Asoville or Aso-mura? — that has been growing in …
Slouching towards irrelevance?
Prime Minister Aso Taro, faced with dismal poll numbers, a potential rebellion within the LDP, and an economy galloping into recession, sought to stem the tide against him by announcing a second stimulus package at a press conference on Friday.The government's purpose is to ease the insecurities of the Japanese people, but also to make …
