According to Goldman Sachs, the world’s largest global investment banks, Japan may be close to a recession. As the second largest free market economy, with the U.S. as the largest, they too are experiencing a slowdown in economic growth. The subprime mortgage crisis in the states has caused capitol investors to liquidate their holdings in Japan among others.
The fallacies of the crisis haven’t gone unnoticed in the global community. Toshiro Muto, Bank of Japan Deputy Governor said today he expects to conduct business “with discretion”. With the majority of the U.S.’s debt solely in the hands of foreign countries, it’s not surprising the damage the crisis has had on other countries.
Tetsufumi Yamakawa, chief Japan economist for Goldman Sachs in a statement, “The greatest challenge for the Japanese economy, needless to say, is a recovery in personal consumption, which has remained in an extended slump.” This trickle down effect from one economy to the next hurts consumer confidence. Currently Japan faces its four-year all time low.
When failing U.S. companies are bailed out by other countries, but they too experience a downward drop in GDP, who will come to their rescue?
source doc: bloomberg
