Japan’s Jobless Rate at 6 Year High

Posted by Ray on July 30, 2009 under Economy, Main | Be the First to Comment

Japan, the world’s third largest economy, has hit a slump with employment which has risen to 5.4% above the median forecast of 5.3%. Even as exports had started to improve consumer prices continued to fall by 1.7% all of which indicates that the Japan is still struggling to recover from the global melt-down of 2008.

With the third largest, formerly the second largest economy until China dethroned it, struggling with a recovery I believe this is an indication that we are not out of the woods yet domestically. Japan did not have the same problems we had with leverage and bad loans, they did that well before the US did, but to still have the economy struggle the way it is troubles me.

The country has many problems and I do not want to be accused of not acknowledging them, but they are predicting things to get worse. Estimates call for unemployment to reach 5.8% which is historically high for them. Spending has fallen by .2% and retail sales fell 3% which is definitely not good for the economy, either here or there.

What scares me the most is that we followed many of the same fixes in 2008 that Japan has tried almost 20 years ago. Japan has also attempted to stimulate their economy numerous times over the year with no success. All of this is Keynesian theory and it has not worked and I fear we may be destined for the same results. I am partial to the Austrian school of economics which is the opposite of Keynesian theory which, you should have figured out by now, has failed.

I believe we will get out of this, but I do not believe it will be because of our governments intervention. I believe we will get out of despite our governments intervention, but we need Congress and the President to stop with the spending. It is bad enough they keep intervening, but they are doing it through borrowing more money, $2 trillion for 2009, which is the single worst thing they could have done.

We can learn a lot from Japan, mostly what not to do, and we have studied their problems throughout the 1990′s. What I want to know is even though we studied their issues and pointed out all of their mistakes we are doing many of the same things they did. Frankly, it just blows my mind that we would ignore others mistakes only to follow them.

Regardless, based on what the President said today I am expecting a worse then expected GDP number tomorrow which should be a gauge of where we really are. I do also expect a modest rise in GDP in 3Q09 as well, but that is the rise in the W recession I predicted. Time will tell who is right.