Astroboy
先輩
- 5 Dec 2007
- 1,264
- 25
- 58
Japan has taught the world a great deal about coping with the financial crisis. Now the West is on its own
I think ... the World fully agrees that almost all advanced economies already entered into Japan's nightmare, and the Japanese lesson helped them somewhat. But they are wondering which direction to go.
In my point of view, The Economist has well understood economic situation of UK, EU and USA at the end of the day. However, their understanding is not enough, but downplay the lesson. I think that the answer is still Japanese lesson, which is the best among possible options --- Huge government expenditure to maintain GDP; Slow restructuring banking industry to maintain employment of small-to-large-sized companies and avoid social unrest; NOT abandoning manufacturing sector even in soaring YEN.
The article says:
In short, The Economist want to believe that Western economies are in more flexible system, fewer political barriers, less resistance to structural changes; fewer zombi banks; etc. etc. And such difference from Japan must be a hope to Western economies.
Do you agree ?
I think ... the World fully agrees that almost all advanced economies already entered into Japan's nightmare, and the Japanese lesson helped them somewhat. But they are wondering which direction to go.
Nothing more will I teach you today
That makes it very difficult to keep on drawing particular lessons from Japan's sad plight. It does, however, still leave a general lesson common to all economic disasters: don't be suckered by false signs of economic recovery. In Japan's case, such hopes have led it repeatedly to tighten fiscal policy before private demand was strong enough to sustain a recovery. That entrenched deflation. Japan also left its banks too short of capital to cope with subsequent shocks.
Policymakers in the developed world still have an enormous task on their hands. Many banks have huge write-downs to make on their loans, economies are burdened with excess capacity and households' debt levels remain high. It would be disastrous to tighten policy too soon, as Japan's example shows. But Japan provides no useful guidance on when the right time would be. For that, there is only trial and error. And the more errors there are, the more the West's next decade may look like Japan's two lost ones.
An end to the Japanese lesson
In my point of view, The Economist has well understood economic situation of UK, EU and USA at the end of the day. However, their understanding is not enough, but downplay the lesson. I think that the answer is still Japanese lesson, which is the best among possible options --- Huge government expenditure to maintain GDP; Slow restructuring banking industry to maintain employment of small-to-large-sized companies and avoid social unrest; NOT abandoning manufacturing sector even in soaring YEN.
The article says:
But there are other ways in which the pupils are in better shape. That is partly because they have less rigid systems. In the more adaptable Western economies there has been less resistance to structural changes in order to maintain productivity. There are also usually fewer political barriers to dealing with bad private-sector debts than there were in Japan. Moreover Westerners are also reaping the rewards of having acted more decisively than the Japanese did—especially when it came to pumping money into the economy and cleaning up financial balance-sheets. With fewer zombie banks, fewer signs of entrenched deflation and much earlier signs of growth, the West is in uncharted territory: it has arguably already got to a stage that Japan never really did.
In short, The Economist want to believe that Western economies are in more flexible system, fewer political barriers, less resistance to structural changes; fewer zombi banks; etc. etc. And such difference from Japan must be a hope to Western economies.
Do you agree ?