Monday, May 13, 2013

Japan is what Krugman wants the US to be

Paul Krugman, Nobel Prize winning economist and NYT columnist, is a proponent of massive government spending.  And by massive, I mean MASSIVE.  He frequently argues that the reason the economy is barely alive is because Obama's stimulus was (is) too small.  Well, newly elected Japanese Prime Minister Shinzo Abe must be a Krugian, since his country has embarked on one of the largest governmental spending programs in world history.  And although it's only been since last December, the early data show really bad outcomes.  From the blog, Zero Hedge Fund:
Japan should serve as a lesson to central planners around the world. 
Japan’s stock market/ real estate bubble burst in the early ‘90s. Since that time Japan has launched NINE QE efforts equal to roughly 25% of its GDP. And GDP growth has worsened despite these efforts from 2% to 1%. Ditto for employment.  Japan elected a new Prime Minister Shinzo Abe in September 2012. Since that time, his primary belief has been that Japan hasn’t engaged in enough stimulus. He threatened the Bank of Japan to get working… and it did, announcing a $1.4 trillion stimulus last month.  Since that time, the Yen has positively imploded. It broke below 100 yesterday for the first time in years. It’s now fast approaching the long-term trend line. When we take this out, it’s GAME OVER for the great monetary experiment of Japan.