At the East Asia Forum, Tobias Harris profiles Australia's biggest customer, "tottering on the brink of ruin":
"Prime Minister Aso Taro has arrived in Washington for the G20 summit on the global economic crisis.
He leaves behind a country tottering on the brink of ruin. The OECD has announced that, like the reappearance of cancer after remission, Japan may once again experience deflation in 2009. Consumer confidence is at a record low. The question on the table now is not whether Japan will be able to avoid recession, but how long the recession will endure. The government’s latest stimulus package is on hold until January, leading some within the LDP to wonder whether Mr. Aso has a handle on the situation. (The Economist summarizes the bad news here.)
The Japanese people, it seems, are battening the hatches.As Blaine Harden wrote in theWashington Post Thursday, Japanese citizens are not particularly enthusiastic about the government’s announced tax cuts, an attitude that might change when they start receiving payments, but then again, it might not. The Japanese public has been through this before, and rather than wait for the government to do the right thing, it seems that citizens are preparing to take care of themselves, whether by stuffing yen under the mattress, deferring big purchases, or doing a bit more shopping at the hundred yen shop. Little surprise that there is little taste for structural reform or any other kind of shock therapy"...
Read the full thing here.