Last updated on: February 4, 2009 at 3:44 pm
By
Desh Kapoor
This is a special post from DK Matai and the ATCA on Global Economy - which is part of his larger Socratic Dialog. You can go to the main site mi2g. Please share your thoughts on this topic in the comments and we will try and bring more in this socratic dialog here at Drishtikone. The numbers coming out of Japan are no longer about degradation, but historically unprecedented destruction. If the government pointers are correct, they are no longer suggesting a recession or even a depression of the style of the 1930s but something like a massive "Reset button" with very different and far-reaching consequences. This downward spiral is much faster, much more synchronised and achieving impact equivalent to one year's worth in the 1930s on a monthly basis, month-in month-out. It is as if the whole country has been visited by an army of King-Kongs, who are busy destroying the industrial output. Japan's industrial production fell almost 10% in December compared with November, worse than the METI (Ministry of Economy, Trade and Industry) forecast. METI has re-done its forecasts for January to a 9% drop, and February down another 5%. That knocks almost 30% output since September, putting it back, at the level of the early 1980s. It took 25 years to reach levels that have been unwound in five months. For carmakers, production may fall by around 50% from last year in 2009. There has never been data this bad for any major economy: even during The Great Depression of the 1930s. If METI's January and February industrial production data is correct, the proportions are apocalyptic. Masaaki Shirakawa, Bank of Japan Governor, recently warned, “The outlook for the Japanese economy has deteriorated dramatically and there is a high probability that it will continue to do so.” Read more