Closing Case Japan

Topics: Japan, Economy of Japan, Investment Pages: 1 (354 words) Published: February 21, 2013
1. In the 1980s Japan was viewed as one of the world’s most dynamic economies, today it is viewed as one of the most stagnant. According to Hill, The Japanese economy has stagnated because in quick succession their stock market collapsed and property prices rapidly followed. Japanese banks found their balance sheets loaded with bad debt and they reduced lending. As the stock market plunged and property prices imploded, individuals saw their net worth shrink. Japanese consumers responded by sharply reducing spending, depressing domestic demand and sending the economy into a recession. 2. One lesson to be learned from Japans history over the past 20 Years is to respond more quickly falling asset prices. Another lesson to be taken is to not cut interest rates to zero and have investments in public infrastructure as it has led to Japan with the highest level of government debt as a percent of GDP in the world. Countries can stop cutting prices during a deflationary period to avoid the spiral gripping japan. If they avoid the urge to keep cutting prices then people will be forced to buy items and hopefully the economy will turn around. 3. It is in the writer’s opinion that to get the Japanese economy moving again they need to boost their birth rates. In the 1970’s and 1980’s birthrates in Japan fell below replacement levels, leaving it with one of the oldest populations. Japan could reverse this trend by increasing immigration, or boosting the birthrate. A country needs money to be pumped into the economy so that it can be successful. Since Japans working force is getting smaller and smaller each year less people are pumping money into the economy. 4. As an international business, the economy that the writer would rather invest in, between japan and India, is India. There are five reasons why Japan would be a bad investment; the European Recession, Hungry Competitors, aging population, massive Government debt, and political instability. The writer also...
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