04-14-2009, 04:03 PM
(first of all, Hi to you guys, I'm brand new)
I guess it would be useless to make a full documented analysis on a non-specialized forums so I will just give my opinion.
Right now Japan economical situation is so complex that I will try to keep it short.
In financial crisis, traders turn to USD, JPY and gold.
The same thing happened this time, which greatly valued the JPY.
As we all know, Japan rely heavily on exportation.
Import raw, export manufactured; a strong JPY mean less export so less income.
Japanese financial authorities would like to see JPY much weaker than it is right now. The forex being what it is, it is very hard to change a macro trend.
Japanese inflation was so low in the last decades that we should talk about chronical deflation instead. So japanese are more than happy to see higher inflation nowadays.
Now for those of you who are scared about inflation, you just can't compare Japan economy to minor economies like Argentina or Zimbabwe who suffered from HYPERinflation. JPY have the reputation of being stable, thats why people turn to it in time of crisis.
Inflation can have devastating effect when not controlled but can also have positive effects.
It will devaluate the JPY. Concretely, it mean more exportations and more income. Import price is pretty much irrelevant because of the added-value of manufactured goods.
Also, considering that the vast majority of Japan debt is domestic, it will diminish it.
I could go on but I'm running out of time,
To conclude, Japan was stuck with deflation for the past decade and seeing some inflation in the current situation is totally welcome.
だいじょぶ
Edit : Oh by the way, it is not 15 billions yen, it is 15 trillions. hehe.
Gimme a stick and I'll make a masterpiece out of it, go figure.
Last edited by Debi : 04-14-2009 at 04:07 PM.
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