Japan's economy leaves recession

[Matter-Eater Lad]

Japan has come out of recession after recording growth of 0.9% in the April-June quarter, compared with the first.

 

The economy had shown four consecutive quarter-on-quarter contractions.

 

Correspondents say that the rise is due to a huge government stimulus package and it is unclear whether the momentum will be sustained.

 

Recent figures have shown other nations coming out of recession, including Germany, France and Hong Kong, a sign the global slowdown is easing.

 

However, the Nikkei Stock Average has been unimpressed by the latest figures - in early morning trading in Tokyo the index was down more than 2%.

 

'Positive contribution'

 

If Japan's latest quarterly rate were maintained for a full year, the economy would grow 3.7%, figures from the Cabinet Office revealed on Monday.

 

http://news.bbc.co.uk/2/hi/business/8204075.stm

[Josh42]

Isn't this speculation part of what got us into this mess in the first place?

[Matter-Eater Lad]

I'm speculating that it was.

[Saffire]

Nick, didn't you post an article just like this about Korea a little while back? Apparently all these countries' governments are dropping money from helicopters to keep the numbers up.

[Dfit00]

More authentic sushi production :dance:

[Matter-Eater Lad]

Nick, didn't you post an article just like this about Korea a little while back? Apparently all these countries' governments are dropping money from helicopters to keep the numbers up.

 

Yeah. Did you read the article I posted about weak consumer spending for the next few years?

 

Japan's economy has been in a lot of trouble for the last 20 years, called the lost generation. Thats basically what America is in for at least, low growth-negative growth or stagnation while the consumer deleverages and saves.

 

I was thinking about something;

 

We saw what happens in a bad economy if the government cuts spending, taxes and involvement like in 1920, we have a quick recovery and boom, then what happens if government does the opposite but then pulls the stimulus out too soon and we have a collapse and great depression like in the 30's. Then with Japan we see what happens with you have continuous stimulus, a lost generation of low or no growth and consumers who save and pay down debt.

 

Since we started stimulus we have two options now keep it going and get a Japan style 20 to 30 year "lost generation" or cut it and risk a collapse, but at least with the collapse we can get the problem solved quicker then work on real growth again, but sadly the Fed is going to mimic the Japanese 20 year recession.

[Josh42]

There's a third option...move out.

[Saffire]

Well Nick, the US has the added distinction of having massive debt and no real assets - our exports are weak relative what they were coming out of the last depression, and relative these Asian countries.

 

Unless we default on our debt, future generations will pay it back via a cheaper dollar, which translates to lower wages and more service-sector jobs.

 

As long as we have economists like this:

 

http://bubblemeter.blogspot.com/2008/08/robert-shiller-interview-subprime.html

 

...who are taken seriously, we'll never learn the lesson.

[Matter-Eater Lad]

Well Nick, the US has the added distinction of having massive debt and no real assets - our exports are weak relative what they were coming out of the last depression, and relative these Asian countries.

 

Unless we default on our debt, future generations will pay it back via a cheaper dollar, which translates to lower wages and more service-sector jobs.

 

As long as we have economists like this:

 

http://bubblemeter.blogspot.com/2008/08/robert-shiller-interview-subprime.html

 

...who are taken seriously, we'll never learn the lesson.

 

I didn't even think about our debt, which is silly of me. I forgot Japan overall was in much better shape, just like America in the 20's and 30's was in better shape. But I do think we won't see massive inflation because people will use as much money as they can get on paying down debt and saving and that means less money circulating in the economy.

However a weaker dollar and speculation will drive commodities up a lot in the coming years, so I fully expect Oil and other fuels to rise a lot.

 

Another interesting thing is in the next quarter inventories will go higher due to expectations of better earning this holiday season, so GDP might actually hit positive but there will still be weak consumer demand this winter, thus a surplus of goods and that would lead to another problem and the market to go down. I'm tying to make up my mind on what will happen but right now I can't.

[Saffire]

But I do think we won't see massive inflation because people will use as much money as they can get on paying down debt and saving and that means less money circulating in the economy.

 

Remember there's little incentive to save and pay down debt until the interest rates rise. Right now, we're still in the "Spending is Patriotic!" phase.

 

But you're right, eventually the Fed-created money will settle somewhere, and I suspect it will fall into commodities and equities first. Then the guys who get rich in this way will spend their money in the general (consumer) economy, and that will drive up those prices, hurting the poor.

[Matter-Eater Lad]

From what I can tell the Incentive in Japan for spending was there, but the people were scared and learned their lesson and against the odds paid down debt and saved. I think Japan's central bank had interest rates low for a long time but people still saved.

[Josh42]

Here's the fix: Eliminate taxes altogether.

[Matter-Eater Lad]

You can't just eliminate it over night, you'd have to slowly phase it out, lowering it til its gone.

[Saffire]

From what I can tell the Incentive in Japan for spending was there, but the people were scared and learned their lesson and against the odds paid down debt and saved. I think Japan's central bank had interest rates low for a long time but people still saved.

 

lol Nicholas Higgenbotham Mccann, you damned statist!

 

Read up on some praexeology before you resort to animal spirits, please! There are no such things as ghosts, even in economics.

 

And Josh, eliminating taxes in a civil society would likely result in the best outcome - instant an-cap society. Because people will figure out a way to profit from an end to government services.

[Josh42]

I'd lol if government was like, "OK. No taxes for a year, see how that works out for you motherfuckers!"

 

A year later we're living in a utopia...