Obama, Japan, and the stimulus
The other day Barack Obama likened the economy of Japan of the nineties or the “lost decade,” as to what would happen if the United States would not do anything. (pass his stimulus)
This is interesting since the stimulus package has the US moving more toward the model that Japan has where instead of acting as an umpire in business like the US has traditionally done; now the government will be acting more like a coach of industry like the government of Japan does.
This “coach” role of government over the economy is what caused the economy of japan to slump in the nineties because the government was so close to business that when the Bank of Japan failed to handle interest rates properly both businesses and government took a prolonged spill. In the US only banks took the spill initially, and even now we are starting to recover before the stimulus is even printed, but this new found Obama closeness will only make the failings of government reflect more starkly on business.
The thought behind this being that if you create a market there will be companies there to meet it, and now even more companies will become dependent on government dollars to stay profitable. What happens when the government dollars stop?
The stimulus is creating an addiction that people will appreciate at first, but when this easy money runs out there will have to be more to come or else this “artificial employment” will dvanish.
This begs the question of the new president: what gives?
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