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Economic Review

2/17/2009

Could it be that the once mighty safe haven of Japan is maybe in worse shape than any of the industrialized nations?

Since the beginning of the economic meltdown that has plagued the US and the EURO Zone alike, many economists and analysts continuously cited Japan as the safe haven economy that somehow avoided all the leveraged bubble policies that led to the significant break down in growth.  Many economists and analysts flocked to the Japan story but one told it like it was, voicing serious concerns as to the credibility of the Japanese economy…the Market Doctor.

The reality of the Japanese economy is that it has resorted to massive printing of Yen some 2 decades ago in order to stabilize its fledgling economy.  In fact, this once mighty economy has maintained interest rates near zero for over a decade and had been in recession for over a decade and the Nikkei Index remains about 32,000 points off its highs set back in 1990.  Its level of debt resembles that of the US after considering the recent massive bailout packages injected into the system.

Was the Doc correct?  Well take a look at Japan’s latest GDP report which shrank an annualized 12.7 percent last quarter.  Yes that was 12.7%.  In fact, headlines are reading….Japan’s economy goes from best to worst.  Correction, it never was anywhere near the best.  If you really want to better understand the state of Japan, read my book "Information Technology, Corporate Productivity, and the New Economy" which has a chapter describing the highly leveraged bubble economy of Japan back in the 1980s.

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