Oct 172010
 
Share

Martin Fackler in The New York Times in October 2010 reported the following:

  • Much of Japan’s middle class’ living standards have dropped, meaning living in less expensive homes, purchasing less expensive cars, travelling less, etc.
  • “For nearly a generation now, the nation has been trapped in low growth and a corrosive downward spiral of prices, known as deflation”.
  • “Just as inflation scarred a generation of Americans, deflation has left a deep imprint on the Japanese, breeding generational tensions and a culture of pessimism, fatalism and reduced expectations.”
  • In the 1980s, Japan companies purchases a variety of properties from Universal Studios to Pebble Beach to Rockefeller Center.
  • However, Japan’s economy is the same size in 2010 as it was in 1991, $5.7 trillion.
  • Japan now “faces the world’s largest government debt – around 200 percent of gross domestic product – a shrinking population and rising rates of poverty and suicide.”
  • “The classic explanation of the evils of deflation is that it makes individuals and businesses less willing to use money, because the rational way to act when prices are falling is to hold onto cash, which gains in value. But in Japan, nearly a generation of deflation has had a much deeper effect, subconsciously coloring how the Japanese view the world. It has bred a deep pessimism about the future and a fear of taking risks that make people instinctively reluctant to spend or invest, driving down demand – and prices – even further.”

To read the entire article, click on The Great Deflation: Japan Goes From Dynamic to Disheartened.

Sorry, the comment form is closed at this time.