Posts Tagged ‘stimulus’

Well That Didn’t Work; Japan Tries Something Else

Monday, August 30th, 2010

Japan’s been in an economic bind for years, but now they’re faced with an increasingly expensive currency as well. What’s a prime minister to do?

  • With the yen at a 15-year high and deflation ironically still going strong, Japanese Prime Minister Naoto Kan has proposed a stimulus plan designed to dig his country out of its economic hole. An expensive yen means it’s more expensive for foreign nations to purchase Japan’s exported goods.
  • Part of the plan involves lending more money to the banks at a very low rate. The idea is to keep the yen’s value low and to encourage more consumer lending – similar to recent U.S. stimulus efforts.
  • Some experts say Kan’s proposal doesn’t go far enough to address the country’s seriously messed up financial situation, and some are even saying this is a purely political move designed to make Kan look good.

Facts & Figures

  • Japan’s main interest rate is currently 0.1%
  • Part of the Japanese stimulus package includes a 900 billion yen government injection (just under $11 billion) into the economy
  • Stimulus money will be used to subsidize green appliances and homes, fund career counseling and internships, and keep domestic companies from outsourcing.

Best Quote

“There seems to be a sense of fatalism. The B.O.J. continues to play the same old game of making incremental, but ultimately meaningless, policy changes in response to political pressure. The government talks of the need for fiscal reconstruction, but then tries to construct an economic stimulus package with tiny fiscal measures and minor, uncoordinated structural reforms.” – Richard Jerram, Economist for Japan at Macquarie, a global investment bank

Is The Recession Really Almost Over?

Friday, May 1st, 2009

Looks like some aren’t buying into doom and gloom predictions for the future of our economy…

  • Analysts at JPMorgan Chase and Barclays are optimistic about the U.S. economy rebounding in late 2009.
  • Causes for optimism include increased consumer confidence, an improved credit environment, and government stimulus funding – all of which should increase spending and bolster the housing market.
  • Others aren’t so sure – Deutsche Bank predicts the economy will continue to get worse through the end of 2009. And according to Credit Suisse, rising unemployment and lower salaries will mean that any short-term improvements will soon give way to another contraction in consumer spending.

Facts & Figures

  • The U.S. economy shrank at a rate of 6.1% in the beginning of 2009 – the worst contraction since the recession of 1957-58.
  • Consumer spending represents 70% of the U.S. economy.
  • JP Morgan and Barclays predictions for the rest of 2009: Continued contraction of 2% in the 2nd quarter, growth at 1% rate in 3rd quarter, and an increase to 2% growth rate in 4th quarter.

Best Quote

“We’re probably hitting the bottom around now.” – Larry Kantor, Head of Research at Barclays