Economic Fluctuation Turns US and Japan Into Two Ugly Stepsisters

Economic Fluctuation Turns US and Japan Into Two Ugly Stepsisters

As the economy is fluctuating every now and then, two countries have been suffering from surging debt, a rapidly falling currency, a sclerotic political system, and a central bank pulling out all the stops to revive a stagnant economy - Japan or the United States.

This week, the similarities between two of the world's economic heavyweights became more apparent, with both starting to resemble ugly twin sisters.

Japan reported a surprisingly deep 0.9 percent contraction in the third quarter, the first time in the year. Meanwhile, initial jobless claims in the U.S. surged to their highest in more than a year, and a clutch of companies announced mass layoffs - the latest sign of how slowly the economy is growing

With the world fixated on the euro zone's debt troubles, Japan this week provided a stark reminder that its vast economy remains a basket case - which puts it in dubious company alongside Europe and the United States.

"It's the U.S. to Europe that's the best comparison, but in terms of levels of debt, comparing debt proximity to the ceiling, then it's a U.S.-Japan race," said Andrew Wilkinson, chief economic strategist at Miller Tabak.

As anti-austerity strikes and a deepening recession roil the 17-nation euro club, most economists are quick to point to Continental Europe as an emblem of what ails America: too much debt, sluggish growth and political paralysis.

However, with Japan's "Lost Decade" stretching into a generation, and U.S. lawmakers scrambling to avert economic disaster as the "fiscal cliff" draws nigh, the two countries are starting to resemble two sides of the same tarnished coin.

Both countries have debt levels that match or exceed their gross domestic product.

Posted by James Fried on Tuesday November 20 2012, 3:18 AM EST. Ref: Yahoo. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0