JAPAN: A NEW LOST DECADE?

JAPAN URGED TO ‘SEIZE THIS MOMENT’ OR FACE ANOTHER LOST DECADE

Christopher Anstey and Mayumi Otsuma

Bloomberg, March 31, 2011

Japan begins forging a road map for recovery from its worst postwar disaster next month, a process that may determine whether it sheds the legacy of the 1980s bubble or has a third “lost decade” of stagnation and deflation.

Key to the result: whether the nation’s companies end an aversion to borrowing, taking on debt to propel domestic investment and wage gains, and whether policy makers embrace a stimulus financed by Bank of Japan money creation, analysts said.

Prime Minister Naoto Kan aims to compile in April the first of what he says may be multiple supplementary budgets. With lawmakers advocating a range of amounts and financing options, Morgan Stanley MUFG Securities Co. calculates that a “bold” plan would yield 2.7 percent annual growth for 2012 to 2015, and a “cautious” one means a 1.1 percent annual pace of contraction.

“The only time you can get things done is in moments of genuine crisis and catastrophes -- there’s a small opportunity to do an extraordinary amount,” Malcolm Gladwell, author of “The Tipping Point,” who writes for New Yorker magazine, said in an interview with Bloomberg Television. “Japan -- a country whose politics were in deadlock and sluggish for many, many years -- I hope they can seize this moment and accomplish a lot.”

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