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It's almost over; let it go. No one in their right mind can deny that 2009 has been the most unpleasant year in decades for the global economy. At times, it looked as if we might be in for a nasty, brutal and lengthy recession before things began to gradually stabilize across several sectors.
At year's end it is legitimate to suggest that the storm is beginning to blow itself out. We may have had something approximating to the crash of 1929 but we are not likely to get another great depression along the lines of the 1930s. The banking crisis that began in the autumn of 2008 was gradually contained this year via a concerted and massive set of government-led interventions in North America, Japan, Britain and Euroland. International cooperation with Keynesian weapons appears to have done the trick - in stark contrast to the beggar-my-neighbor, cost-cutting orthodoxy of the interwar period.
The world is now breathing more easily as cash injections galore shore up the very financial institutions that had started the mess in the first place. No wonder there has been anger in the West at the manner in which banks that were first granted emergency blood donations have been slow to lend again. No wonder, too, that politicians in the West have slammed the banks for celebrating their rescue courtesy of the taxpayer by rewarding themselves with handsome bonuses.
Yet it may well pay to be cautious over Japan's prospects for the new year. While other major economies can at least begin to reckon with greater inflation on the horizon, the reality for Tokyo is the creeping return of the "D" word. The bogey of deflation is already hitting us and it is surely going to take a series of full-scale emergency packages to avoid a repetition of its lost decade.
The Japanese public does not need to be told of the advantages and disadvantages of deflation. It knows, of course, that once deflation has set in, the chances are that it will be around for a mighty long time. As it becomes more and more entrenched, the temptation is for Mrs Watanabe to postpone her big ticket shopping for a few more months and simply wait to see how much further prices will keep on coming down.
Such thinking makes perfect sense for the family budget but it inevitably prolongs the nation's economic woes. It may also contribute to the fact that her husband receives less overtime and that their eldest son can only find low-paying part-time work at the suburban convenience store or bicycle repair shop.
The evidence over deflation was underlined this week by a visit to my local supermarket down on the coast. With consumers stocking up for the holidays, this usually means a case of seasonal price hikes but not this year. No sir. My receipt shows that ripe avocados are going for 68 yen each and that excellent value Chilean wine can be found for 590 yen.
For now, though, Japan is still pretty content with its coalition cabinet led by Prime Minister Yukio Hatoyama when compared with the dismal ratings of recent LDP administrations but the big challenge remains the economy. Getting more people back to work, while fulfilling its manifesto promises, will require yet more increases in the government debt, even if this will probably worry the electorate far less than seeing what happens to promised child allowances and their parents' pensions.
It's true that department stores and supermarkets keep on registering lower sales and that major corporations are merging out of necessity but Japan should take a little bit of comfort from two factors. First, there is GDP growth, unlike Britain and much of the Eurozone, and secondly, its financial position has its positive side through hefty trade surpluses.
As 2010 approaches, Japan senses that other nations have had an even harder time of it this past year. Japan has certainly had its share of troubles but with a new government and a spot of luck, it could be in for a brighter future. At least it won't have to endure being on the receiving end of any more lectures on the benefits of the Anglo-Saxon economic model or how best to supervise its financial system. Blessings, indeed, that are surely set to continue.
© Japan Today
14 Comments
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tkoind2
2008 was bad. 2009 terrible. 2010 will be difficult I think. Much of the recovery will show up benefiting those who already got through 2009 in one piece. For the unemployed or underemployed, there isn't much good news out there. 2010 will continue the cycle of hardship for working people.
The one thing we all need to be considering as the year ends, is the future and how we prepare for it. The global economy of rabid consumption cannot continue, the recent crash should teach us that. But beyond the credit and imaginary money issues, there is the declining supply of oil in the post peak world and the increasingly obvious negative impact of our consumption driven world.
My hope is that people will start to think. Conserve energy, cut down our consumer footprint and get by with a lot less. And start to demand that the world explore other means of economics that are sustainable and less subject to the greedy whims of big business and the 1% of people who benefit from this system.
Change is inevitable as resources disappear. Better to start to think about collective organized change now than waiting for the next major disaster to hit the global economy. And this positive change begins with each and every one of us voting with our wallets in how we consume, what we consume and how we choose to live a low impact lifestyle. Hopefully one that involves more ties to local community and more responsibility for others.
societymike
While I will admit 2009 wasn't the greatest, I got through it just fine. Even with all the doomsday talk, it wasn't that big of a deal IMO, atleast for me. I didn't really change my lifestyle too much, I ate the same, enjoyed the same things, but maybe I just watched my money closer?
Besides, that, my twin sons were born this month so I am so happy that I can no longer see any big problems that affected me too much. 2010 will be much better for sure though.
davestrousers
The unemployment rate in Japan increased by about 1.5% in 2009. Apart from those that happened to be part of that statistic then I guess the direct effects of all this in 2009 weren't that bad. I'm guessing that young people entering the job market were affected the most.
Now this is the real issue. Tax revenues are falling and are expected to make up less than half of next year's government budget. For a country with a debt-to-GDP ratio that already exceeds 170%, it will interesting to see where this goes.
bsosaka
2009 was not all that bad. I have to say I survived quite well without even having a job. I might have lost out financially but compared to other times in my life 2009 was much much better. At least I did not have to resort to eating lambs hearts for Christmas.
As for my friends and associates even those who had money in the Iceland banking system got it back after a while.
The economy is only as bad as the media want us to think.
Maybe if America had not spent so much money going to war and looked after its domestic affairs it might not have been in the state it is. Quite frankly I have no idea why other countries namely Japan and China helped it out financially they will never get the money back from such a disreputable country.
The best thing Japan could do is break its connection with the US and become an independent country again.
cleo
2009 was a black-and-white year.
The good bits were great.
The bad bits were devastating.
jtuzr
Luckily for me, 2009 was a "stable" year professionally. As opposed to some folks I know who lost their jobs and still can't find work despite their skill set and work experience. My heart goes out to them. On a personal note, 2009 started off great but ending on a sad note. I'm so glad this year is finally coming to a close. Sure hope 2010 has some good things in store for all of us....
nisegaijin
in 2009 we saw a market correction that was inflated by goverment bailouts to simulate recovery.
In reality we aren't even close to recovery and we will see another bubble burst in 2010. Prepare for the next crash, boys and girls. Crash that will make 2008 look like a day at the beach.
rtega
Ok, let's try again: economists are slowly recognizing that the rising oil price was one of the triggering factors of the 2008 almost crash. Oil price suddenly went down when the demand went down because of the economy going down the drain. It went down to about 40$. Now it is at 80$. Remember that we were at 30$ two or three years ago with the exact same demand. When the economies are slowly gathering pace again the demand will grow once again. This suggests that when the economies are up and running as they were before the crash we can get into quite some difficulty if not a total crash.
In my oppinion the entire talk about climate is just disguised talk to prepare the public for the fact that we are using way too much fossil fuel. They can't actually say that out loud or otherwize stock markets might as well crash tomorrow.
bcbrownboy
Just when the J-economy tanks completely is only a matter of time. Just have your money in a foreign bank, and hit the road when it happens.
herefornow
Please, this piece is just more pure socialist clap-trap from good old Henry Hilton. He conveniently glosses over the fact that many economists in Japan, including Fujii, the Finance Minister, are very concerned about the health of the Japanese economy and the swelling debt and persistent deflation. In fact, many believe the chances of a "double-dip" recession are just as high here as any sustained recovery are. And his cheap shot at the "Anglo-Saxon" economic model in his last paragraph is total crap. Is he forgetting that all those same Anglo-Saxons are the ones who bought all those Japanese cars on easy credit, so Japan could thrive? Likewise is he ignoring the massive bailout of JAL on the horizon, or the one of all the major J-banks a few years ago? Sorry, Henry, but smugness about Japan's economic situation is very much mis-placed.
some14some
Henry Hilton may put me in the above category but i am here to deny and say it wasn't so unpleasant for the Global economy, not for China, India, Russia....!
JeffLee
it's gonna get a lot worse, after the stimulus money runs out. The financial system hasn't reformed itself, and this time it's going to be a disaster due to all the increased public and private debt.
Dewaashita
The year itself is not at fault.