---One-time powerhouse, it’s withdrawing from the stage---
Nov. 1, 2012, TOKYO (MarketWatch.com) --A couple years ago, an American journalist 10 years resident in Tokyo offered a provocative assessment: Japan, he said, had decided to gracefully withdraw from the world stage.
This month, during my first return to Japan in a decade, I put that assertion to an English friend who had lived even longer in Tokyo. “That’s about right,” he said, “battered by deflation and a overly strong currency, the Japanese have concluded that they can’t compete with a rising China and are withdrawing into themselves.”...
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...There is no clear path out of the deflationary trap. Federal Reserve Chairman Ben Bernanke, then a professor at Princeton, counseled the Japanese in 1999 to open the monetary floodgates. “Japanese monetary policy,” he wrote, “seems paralyzed, with a paralysis that is largely self-induced. Most striking is the apparent unwillingness of the monetary authorities to experiment, to try anything that isn’t absolutely guaranteed to work."...
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...The most troubling aspect of Japan’s malaise may be psychological. Resistant to immigration and with a rapidly aging population, Japan seems to have its lost its self-confidence along with its drive for economic leadership.
The once-popular dictum of Mike Mansfield, the respected former U.S. ambassador to Japan, “that the U.S. and Japan comprise the world’s most important bilateral relationship, bar none” now seems hopelessly quaint...more...
Depressed Hat by Sublight Monster, on Flickr
