Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. On Japan's ElectionsFirst, A couple of pieces from today's Financial Times. This one focuses on the "business community's" fears of the newly-elected Democratic Party of Japan, especially regarding temporary workers. Temps have been notoriously exploited during the long process culminating in Japanese companies (especially big exporters) returning to profitability, and have been rewarded for their labors by being let go en masse since the crash. The DPJ has promised to ease their lot, but it's an open question whether or not they're serious or capable of standing firm on this and other issues important to business.The second is about what the DPJ victory may mean by way of foreign policy. The DPJ has pledged that it will pursue a more independent (of the US) foreign policy than its predecessor, the Liberal Democratic Party, even to the point of reaching out to China. This would constitute a huge step in the development of Asian foreign relations, and one must ask whether or not the old cliche about Japan buying nuclear protection from the US by purchasing its ever-less valuable bonds will continue to hold true. The FT's David Pilling is an excellent observer of Asia. Here he writes interestingly on the DPJ victory's potential impact on the Japanese ruling classes and bureacracy. Finally, Karel van Wolferen is another fine observer of the Japanese scene, who has written about Japan in New Left Review and other fine publications. Here he meditates on the prospects for real change after the election. Labels: Asia, Bank of Japan, China, David Pilling, Democratic Party of Japan, Foreign Policy, Karel van Wolferen, temporary workers, Yukio Hatoyama Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Germany and Japan Return To Growth (For Now)From Bloomberg:Euro-Area Economy Contracted 0.1% in Second Quarter (Update4) Bloomberg By Simone Meier Aug. 13 (Bloomberg) The euro-region economy barely contracted in the second quarter as Germany and France unexpectedly returned to growth, suggesting Europe's worst recession since World War II is coming to an end. Gross domestic product fell 0.1 percent from the first quarter, when it plunged 2.5 percent, the most since the euro- area data were first compiled in 1995, the European Union's statistics office in Luxembourg said today. Economists had estimated GDP declined 0.5 percent in the three months through June, the median of 32forecasts in a Bloomberg survey showed. Stocks rose and the euro climbed after today's figures added to evidence the worst of the global slump has passed. Demand for European exports is improving just as government rescue packages and lower interest rates support spending at home. While the data suggest the European Central Bank won’t need to add to stimulus measures, rising unemployment across the region may still stifle consumer spending. Read the rest of of the article Labels: bailout, Bank of Japan, Eastern Europe, economic indicators, financial crisis, GDP, Germany Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More Craziness: Japan Runs Record CA DeficitFrom The Financial Times:Japan in record current account deficit By Michiyo Nakamoto in Tokyo Financial Times Published: March 9 2009 02:07 | Last updated: March 9 2009 05:39 Japan suffered its largest current account deficit ever in January, reflecting the impact of plunging global demand on its export-dependent economy and raising concerns that it was now in a depression. Japan's current account fell into deficit for the first time since 1996 and at Y172.8bn ($1.75bn, €1.39bn) was much larger than the Y15.3bn shortfall forecast by economists. The sharp deterioration in the current account balance highlights the impact that falling demand, a higher yen and lower interest payments have had on Japan's revenues from overseas. That in turn has led to a rash of job cuts and factory closures that have added to the economic gloom. Corporate bankruptcies in Japan rose 10.4 per cent year-on-year in February, in the ninth straight month of increases, according to Tokyo Shoko Research. Japanese policymakers have scrambled to counter the damage wrought by the global financial crisis, but have had limited success so far. The government last week won passage of a Y5,000bn stimulus package, which it rammed through the Diet following months of wrangling with the opposition. The Bank of Japan has been buying commercial paper and corporate bonds but growth in bank lending slowed in February, for the second month. January's deficit was the biggest since the government started compiling comparable data in 1985. Copyright The Financial Times Limited 2009 Labels: Bank of Japan, financial crisis, trade deficit Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Lessons From JapanInteresting Article in the International Herald Tribune on Japanese monetary policy (both yesterday's version and that the more longer-term variety stretching back to the serious deflation days). Here's the most pertinent point:"According to Jerram, of Macquarie, one lesson of Japan's experience with such indirect measures is that they work only if bankers are confident that they will remain in place until the economy actually revives. To make this clear, he said the bank should accompany such an easing with public commitments not to raise borrowing costs again until some target is met, such as a rebound by consumer prices." Not sure if our program, such as it is, is geared toward this sort of option--at least not yet. Bank of Japan cuts rates for the first time in 7 years By Martin Fackler Friday, October 31, 2008 TOKYO: The Japanese central bank cut its benchmark interest rate for the first time in seven years on Friday, joining earlier moves by the U.S. Federal Reserve and other central banks to soften the brunt of a possible global recession. The Bank of Japan's policy board voted to lower the overnight lending rate between banks by 0.2 percentage point to 0.3 percent, reducing borrowing costs in order to rekindle growth in the country, which has the largest economy in Asia. The bank also seemed to confirm fears here that Japan was heading into a recession by lowering its forecasted growth rate for the current year to around zero percent, citing higher energy prices and weakening demand for Japanese exports. The loosening Friday was also aimed at easing a growing credit crunch in Japan, which had long seemed immune to the international financial contagion. As an additional credit-easing measure, the bank said it would start paying interest on some of the reserves that commercial banks keep at the central bank, a step that would provide more cash to lenders. This was the first interest rate cut during the current financial crisis by Japan, where short-term interest rates, already near zero, have constrained the central bank's room for maneuver. Read the rest of the article Labels: Bank of Japan, banking system, financial crisis bailout, Monetary Policy, recapitalization Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
