News: Japan's economy in recession again (perhaps)

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The latest Economist reports that Japan's economy may again be in recession. Japan was in recession since the early 1990s for about a decade, but had picked up again in the new millennium. Now, it seems that those gains might have just been temporary.

On the positive side, housing prices have perhaps hit rock bottom. Interest rates have been close to 0% which means that although a small house in Osaka might still cost you US$500,000, the extremely low interest means your monthly mortgage payment on a 35 year loan may be only US$1300 or so.

The 0% interest has had a disproportionately negative impact on elderly citizens who live on a fixed income. Unlike the United States, most people do not have any retirement funds in 401K type programs or other investments. Most retirees survive on their government or corporate pensions and savings. With interest rates so low, most pensioners are trying to live as leanly as possibly -- which in turn drags down the economy because their are more elderly than youth in aging Japan.

Of course the central government is worried that raising interest rates would kibosh any hopes of recovering from the recession. It's a deadly negative feedback loop.

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About this Entry

This page contains a single entry by Karen Nakamura published on March 9, 2005 6:07 AM.

News: Kyocera Contax to end camera production was the previous entry in this blog.

Rant: Amtrak vs. Shinkansen is the next entry in this blog.

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