chinese stimulus, page-101

Dopey, at the risk of boring you and others, given that I've mentioned this several times before, Japan was in a fortunate position during its post-credit bubble deflation era.

That's because Japan was still producing large quantities of high-value exports (cars, ships, electronics etc) for the world's major economies (US, China, Europe and EMs) which were growing strongly during those years. So this provided a national income high enough to maintain the massive bank bailouts and sustain the government stimulus for much of this time. Crucially, it also kept unemployment low.

Also, Japanese people had a high level of savings so they could afford to pay off much of their personal debts and absorb the wealth destruction without too much hardship (although consumer spending declined significantly which only worsened and prolonged the deflation).

Europe, US and China are not in the same fortunate position as Japan was to ride out deflation.

Although much of Japan's national debt is held within the country, debt levels have ballooned to unsustainable levels. At more than 200% of GDP, Japan’s debt load is the highest among all developed nations (even higher than Greece, and we know how that went).

Japan has raised taxes and cut spending to try to get that debt under control (which only have further deflationary effects). Japan's ageing population, resulting in falling tax revenues and an increasing social welfare burden, is a further drag on economic recovery moving forward.

Japan's only chance of avoiding its own sovereign debt crisis is through economic growth. But that is reliant upon the strong and ongoing growth of its major export nations, which unfortunately seems highly unlikely.

It's a global economy and the trend towards deflation is also global.