Core inflation rate fell in September to a record 2.4pc, than at any other in the country’s lost decade, but also fell. A rising yen knife further distorted. Currencies against the euro rising against the dollar 27pc, and 43pc against sterling since mid-2007 22pc.
Hirohisa Fujii, finance, abandoned his policy of non-intervention, yesterday, saying that Japan would “take the necessary measures” to prevent the disorderly exchange rate fluctuations.
Junko Nishioka by the Royal Bank of Scotland, said the yen, close to 90 yen against the dollar has passed the “breaking the broken, even if the interest rate” of the manufacturers such as Toyota, Honda and Sony. “Exporters face the possibility of exchange losses,” he said.
The crisis engulfed the world’s second economy significantly. Falling profits in the second quarter 53pc. Total cash income fell 7.1pc this year. Tax revenues have fallen into 27pc. While the economy is no longer in a recession, GDP has shrunk 8pc fall in exports from the highest and 36pc (yen).
Andy Xie, Asia’s leading consultant, said Democratic Party of Japan by a poisoned chalice. He said: “The 2008 global credit, Japan’s exports of machinery to bring the bubble burst, in all OECD countries. Japan looks like a depression.”
This is unfortunate in Japan, the yen tends to rise in savings for the repatriation of their citizens turbulent times. However, other complex forces also at work. In interest rates decline, the Western countries have closed the gap between near-zero yield.
Tokyo’s grim experience in Europe, small-scale deflation panic emerging lessons. September inflation rate in Belgium 1.2pc, in Spain, 1, – 0.3pc in Germany. Governments have been expected to reduce (from last year’s peak price deflation in a very short round) feed through. However, this pattern has emerged under the pressure drop proved to be more durable than the state expected string.
Gabriel Stein of Lombard Street Research, said the European Central Bank adopted a gambling assume prices will rebound in 2010 security. “It is strange that the ECB seems very much concerned.’s M3 money supply has been contracting year in April. The European Central Bank’s quantitative easing (€ 600 million) has just 0.5pc of gross domestic product. We believe that they should do The gross domestic product 5pc. German this worry is the ever-present danger of inflation, but deflation may be a greater danger, “he said.
For the deflation in Japan is now the hot seat. The Democratic Party has always been opposed to action, when in opposition cap the yen, saying the new policy advocated by business leaders, consumers and permanent damage to the export-oriented model of dysfunction. But their circumstances to take office to make it almost impossible to do what they want.
Japanese stand firm and hold down the yen in the sense of loss and become a decade of booming global economy, exports. The Democratic Party is doomed to repeat this, even though it will be more active.
Simon Derrick from Bank of New York Mellon, said Japan has spent 600 billion U.S. dollars foreign exchange markets to weaken the yen from 1993 to 2004. Private savings are also leak abroad, to avoid the zero interest rate from Iceland go for the higher rate of return, through “carry trade, New Zealand and the United Kingdom.”
All of this can be repeated easily. Anglo-Saxon, Switzerland and Sweden to pursue covert or overt devaluation. U.S. dollar carry trade has become an opponent of the funders.
As the planet’s most ancient society, Japan is a structural decline laboratory. It’s working population has been declining since 2005. Savings rate has fallen to 2 of gross domestic product, lower than the United States. The International Monetary Fund said that public debt will reach the 227pc of GDP next year, the results of the last stimulus package.
Japan has been able to bond markets through a dedicated fund deficit cheaper. Bond yields is currently 1.29pc. “Is this a favorable environment is expected to continue in even larger increase in public debt in the face?” Asked the IMF. Little. Japan’s largest pension fund into government bonds this year, the seller.
Democratic Party could only cry. After half a century of waiting, to launch their child care, health and welfare policy, they seize power, only to find an empty little treasuries.