Japan confirms collapse of competitiveness as overwhelming debt weighs on companies .

Japan’s foreign trade deficit continues alarmingly negative despite the very favorable exchange rate with dollar and euro .

The data just released shows that despite the fair recovery of exports , the huge increase in imports are beating all expectations to a trade negative gap that warns of epidemic loss of competitiveness .

Japanese companies are as sharp as ever in their management of products , services and logistics , but the burden of official debt supported by them is proving impossible to digest .

Japan situation is the result of the wrong policy of the different governments which have spent all their efforts in maintaining an artificially weak rate of the yen .

That policy had been acceptably functional as economies of the USA and Europe were buoyant , but currently the only economy able to guarantee a significant growth of consumption is China and Japan is unable to sell in China what they have lost in the western economies .

The japanese problem simply has gone beyond solution because the crisis in the USA is there to stay for many more years than ” traditional experts ” could have guessed and Europe is also partially stalled with some of the continent economies tied up in very , very long , stagnation and recovery processes ..

Japan’s situation caused by the country’s debt is so big , that it would require an exchange rate with dollar and euro beyond any realistic considerations which would besides require a much bigger demand en USA and Europe that facts may allow to expect .

The only sound action that the japanese government may consider is the recovery of domestic consumption through the strengthening of japanese middle class purchase capacity and that as things are , may take much longer than japanese economy may afford .

In fact Japan’s problem is no much different than the problems being confronted by the USA and other western countries , but USA has the support of dollar which sovereign debt is shared by almost every one in this planet and the other economies affected by the japanese disease are far much smaller and therefore represent a lesser risk to world economy .

The big question no matter where we look is the world debt , irrespectively of whether you are a debtor or a creditor . The debt cannot be paid because the added value that global economy can produce to compensate for it is very far from what would be needed .

Why are we here ? Precisely because instances governing world economy forgot that the only way to maintain the balance between offer and demand , is to preserve a wide middle class enough healthy able to consume what is produced without the need of endemic indebtment to compensate for the low purchase capacity provided by average salary .

In other words , the world resources are growingly concentrating in fewer hands because economic policies are designed to promote it .

China may turn to mitigate world economy pains , if as the chinese government has lately promised the country is to focus more on the development of a healthy middle class that will boast domestic consumption than in the obsession for exports as the dominant drive for growth . For a country with a fith of world population eighty per cent of which is in hunger for everything , it is the obvious choice .

Brahmason

Brahmason@gmail.com

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Published in: on noviembre 20, 2013 at 6:02 am  Comments (5)  

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