Japanese Economy Slips Into Economic Recession
Results just released show that in Q3 of 2012 Japan’s economy contracted by nearly 1 percent, marking the second consecutive quarter of shrinking GDP. This data meets the technical definition of an economic recession, and actually continues more than two decades of recessions interspersed with bouts of stagnation and marginal growth.
Japan, currently the third largest economy in the world ( and for most of the past two decades the second largest) is trapped in a maze consisting of an L shaped recession driven by poorly conceived policymaking over the past 20 years. With its publicly subsidized zombie banks, the highest public debt to GDP ratio of any major advanced economy, worrisome demographics, unstable politics (another national election is looming), bad luck ( the Tsunami and earthquake) and growing friction with China put Tokyo in a vulnerable position. Further shocks could easily slide Japan from recession to full-blown economic depression.
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