Japan in Crisis

Before leaving the house for work this early morning, the news on TV caught my attention. Due to economic crisis we are currently facing, a lot of people lost their jobs. Here in Japan, not only Japanese but most especially Foreigners were laid off, what I saw on TV, a lot of Brazillians in Hamamatsu went to City Hall asking for jobs. The company I was working with, is located in Toyota city, where the car manufacturer mogul Toyota Motors office and its car factories were located. So, the main industry here and to its neighboring cities were auto parts supplier for Toyota. Due to economic crisis we are facing, Toyota Motors scaled-down its production to 75%, leaving a lot of employees jobless and thus also created an impact to its suppliers. The situation made me feel bad, I felt sorry for those who lost their job, I am lucky I still maintain my job and I thank God for that.

Economic Crisis of 2008

It all started when the United States' economy collapsed, the serial bursting of the housing and financial bubbles and of the pursuance of the US dollar fall, means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down massively. Thus creating a domino effect, neither Asia nor Europe as well as all the countries/economies strongly linked to the US will suffer the roughest, the most sustainable and the most negative impact of the ongoing crisis.

In Japan exports in June declined for the first time in about five years falling by 1.7 percent. Exports to the United States and European Union fell 15.4 percent and 11.2 percent respectively. The decline in exports and increase in imports cut Japan's trade surplus $1.28 billion a decline of 90 percent from the previous year. An economist at the Royal Bank of Scotland said the decline means the Japanese economy most likely declined in the second quarter. Taro Aso, secretary-general of Japan's ruling Liberal Democratic Party, said he believes Japan had entered a recession. Japan's economy declined by 0.6 percent in the second quarter of 2008. This was later revised to a decline of 0.7 percent. Japanese exports grew 0.3 percent in August of 2008 compared to a year before down from 8 percent the previous month. Exports to the U.S. fell 21.8 percent, the biggest decline on record, and exports to Europe fell 3.5 percent. Two Japanese banks appeared on the list of major Lehman creditors.

October 31, The Bank of Japan cut the key interest rate to 0.3 percent from 0.5 percent. This is the first cut in seven years. The move from Japan is the first that supports rate-cutting measures in response to the global financial crisis by other central banks. Some citizens say that the cut of 0.2 percent was desultory and the meeting of the nine member bank’s policy board showed how deeply divided they were.
Japan’s central bank have come under fire lately for its reluctance to reduce the key interest rate, which is already the lowest in the industrialized world, in an attempt bolster the stock market and to control the surging yen.
The interest rate cut that many economists though would have been halved to 0.25 percent came just a day after the government announced a $51 billion (£31 billion) stimulus package. Anal lists have said that the cut that was lower than expected would give off the wrong signals about Japan’s commitment to boost the global economy. In the stock market in Tokyo the Nikkei 225 index tumbled 5 percent to 8576.