Turning Japanese

The latest CSO Indices for Industrial Production and Turnover (pdf) are especially grim. Production volumes in the 'Modern' Sector have fallen back to levels last seen in 2006. Production volumes in the 'Traditional' Sector (predominantly Irish owned) have fallen back to levels last seen in the late 1990s ... The overall production index was down -13% year-on-year in December: turnover was down -7.7%.

It has got me worried that we might be 'turning Japanese'. Japan's industrial output also contracted sharply in December, by -10%. Moreover, listening to a podcast on the situation in Japan by Peter Day, it is striking how strong the parallels are between Japan's property bubble-fuelled boom and bust in the late 1980s and our own in just the past few years. And despite frantic efforts by Japan to reflate, inflate and do-just-about-anything to get their economy going again, it simply hasn't worked. Here's Bill Bonner with an update:

Public spending was so aggressive, it boosted Japan’s government debt to 180% of GDP – more than two times the current U.S. level. But did all that cement buy Japan out of its slump?

You be the judge. Housing prices in Japan are now back down to where they were in 1975 – nearly 90% below the late-’80s peak. And stocks? The Nikkei index is back down to where it was a quarter century ago. Stocks sell for half their book value – and they’re still considered too expensive for beaten-down, hyper-fearful Japanese investors. The downturn began in 1990. Over the following 19 years, it did more property damage than the Great Tokyo Fire of ’23 and the Enola Gay combined, wiping out wealth equal to three times the country’s GDP. This was despite interest rates at zero…and a heroic effort at Keynesian stimulation

The average Irish new house price in 1975 was €13,254, by the way. No, I didn't have a nice feeling in my stomach after reading that either ...

Maybe this will cheer you up:

The Vapors - Turning Japanese
Uploaded by mg217