In 1991 Japan could look back on three decades of growth at an average rate of 6.5 percent. In the 1980's Japan dominated consumer electronics, semiconductors, automobiles and Japanese companies were buying up American properties at an alarming rate. But the past five years have been ones of economic gloom and the solution is elusive. Nissan's auto sales have fallen 22 percent and it has closed factories. Property values have fallen 50 percent and resulted in bad loan losses for Japanese banks of as much as $1 trillion. Homebuyers on around 1990 are burdened with properties that are worth half of what they paid for them.
What is China's Grand Strategy?
What connects China's push to internationalize the RMB, set up new global institutions to compete with the post-WWII order set up by the United States, and China's militarization of the South China Sea? I've revisited an old discussion in the forms debating the death of the American superpower, and wondering how it might be achieving by a rising China.
FT's Alphaville picks up this interesting comparison by Deutche Bank:
Yup, apparently more US with a 2-3 year lag than Japan. As they argue (again and with our emphasis):
The difference between Europe today and Japan in the 1990s has become more pronounced than it was a few months ago…
A Japan-type dynamic could be defined as a situation in which private sector deleveraging is slow and is not accommodated by either aggressive fiscal nor monetary policy. As a result, the credit impulse (i.e. the pace of deleveraging) never reverses, and domestic demand remains under pressure. Ultimately, the economy converges to a situation in which inflation is negative and the output gap is widening while real interest rates are too high.
The stagnation that Japan has experienced since its real estate bubble ended in 1991 has caused much anguish and speculation for how Japan can turn its economy around and recapture some of the dynamism it experienced in the 1980s. Many observers blame the Plaza Accords, pinpointing it as a cause of Japan's decline as an economic power. The Nikkei Asian Review has an interview with Toyoo Gyohten, the former chief of the International Finance Bureau at the Ministry of Finance, and an official who was involved in the negotiation of the Plaza Accord. He takes a more balanced view of the genesis of the Plaza Accord, and the cause of Japan's subsequent stagnation:
Bloomberg has a story out showing Japan's efforts to spur the robot revolution in order to address its labor pool decline and attempt to reinvigorate economic growth:
The rise of the machines in the workplace has U.S. and European experts predictingmassive unemployment and tumbling wages.
Not in Japan, where robots are welcomed by Prime Minister Shinzo Abe’s government as an elegant way to handle the country’s aging populace, shrinking workforce and public aversion to immigration.