The Governor of the Bank of Japan, Masaaki Shirakawa, spoke before the Second International Journal of Central Banking last week on one subject: Is the U.S. turning Japanese? (via Pragmatic Capitalist)
Click here for the presentation >
In his presentation, Shirakawa compares the two economies, noting the correlations between Japan’s lost decade and the current U.S., comparing metrics like core inflation, bank loans, and central bank balance sheets.
The du jour comparison of the U.S. and Japanese economies has come under a lot of criticism for its exclusion of cultural and demographic issues, but from a purely economic standpoint, there is a lot for that comparison to stand on.
What might be most alarming in this presentation is what powered Japan’s rebound: exports.
Who would consume those U.S. exports, remains to be seen, as Europe is experiencing similar problems and the emerging markets of China, India, and Brazil may not yet be ready for prime time.
Output has declined more dramatically for the U.S. and Europe in this crisis, due to weakened global demand.
The correction for Japan came in three steps. Unknown whether or not the U.S. will play out similarly, though the debt one is clearly happening.
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