A Warning From Japan by Gregory Hilton

Republicans must win the Congress and the White House because America have to avoid the type of deflation and stagnation which has taken over Japan for a generation. Japan is one of my favorite places and I seriously thought of moving to Tokyo at one point. The Japanese stock market has collapsed 75% from 1989, and now the debt is 200% of GDP. The lesson is that deficit spending and stimulus programs do not work.
As the article notes:
“economists are now warning of ‘Japanification’ — of falling into the same deflationary trap of collapsed demand that occurs when consumers refuse to consume, corporations hold back on investments and banks sit on cash. It becomes a vicious, self-reinforcing cycle: as prices fall further and jobs disappear, consumers tighten their purse strings even more and companies cut back on spending and delay expansion plans.”

THE GREAT DEFLATION: Japan Goes From Dynamic to Disheartened
http://www.nytimes.com/2010/10/17/world/asia/17japan.html?_r=1&partner=rss&emc=rss

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