THE PLANK SEPTEMBER 1, 2009
I got a message about Karel van Wolferen's comments from Tag Murphy, the author of The Weight of the Yen. Tag adds the economic dimension to van Wolferen's argument:
I completely agree with what Karel wrote. The only thing I might add is the significance of the timing given what is going on in the currency markets and in Japan's external accounts. Japan is beginning (sporadically to be sure) to run trade and current account deficits and the yen is climbing. The old export model is broken, probably cannot be fixed--and as a result, Japan no longer derives any obvious benefit from financing the US deficits (up until now, by financing US deficits, at least Japan could keep its factories-for-export humming). Japan is going to require real political leadership to do two things: overhaul the structure of its economy and re-order the US-Japan relationship. Is it a coincidence that just at the time the country desperately requires real leadership that it now has at least a fighting chance of getting some?