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