Saturday, May 12, 2012

Why Japan Tells Us That President Obama Might Lose On November 6th, 2012

By Shervin Stoney

Romney is not Reagan. He does not command an audience the way Reagan did, and he certainly will not be able to unite the Republican Party under a banner of moderate conservative values thanks to the Tea Party. Obama is not Carter. He is articulate and his foreign policy agenda is superb, with Hillary Clinton at the helm. Shouldn't this indicate a win for President Obama? No. It’s the
economy, stupid.

While 1980 America might draw the closest comparison to our current economic situation in America, there are a few factors that are in play today that make it very different and these factors are chillingly similar to the “lost decade” of the 1990s in Japan.

The miracle economy of Japan came to a screeching halt, first during the oil crisis of the 1970s, and then again in the early 1990s. The expectation by many Japanese in the nineties was that the economy would recover quickly because it had in the seventies, and why not? (The same way we expect the US economy to recover overnight.)

There were three major factors that caused the Japanese economy to collapse in the early 1990s. First, globalization caused many of Japan's largest companies to shift manufacturing and other jobs overseas. Companies like Toyota were becoming global companies and began to invest heavily in expansions overseas.  Second, bloated prices in the housing market and economically unsound mortgages created a bad debt that came to a horrific crash. Third, the biggest banks began to fail because of bad debts and loans in the housing market, coupled with low consumer deposits, and the banks had no regulations that required them to carry reserves to offset bad debt. 

The United States in 2008 was Japan circa 1990: free-falling job market with no manufacturing backbone because of globalization, a housing market crash, and the largest bank failures since the Great Depression.

Economists have speculated that there were things that could have been done to help the Japanese economy, but there was no true silver bullet, the damage was already done. The government could have taken effective action to slow the crash and start Japan on the right track. However, the Japanese government was ineffective and spent most of the nineties and early 2000s in turmoil. From 1989 to 2001 the Japanese government had 11 different prime ministers. That is an average of just a little over a year for each prime minister.

To offset the lack of growth during the "lost decade" the government invested a great deal of money into infrastructure development in hopes of jumpstarting the economy. This drove up the national debt in Japan, today it is estimated to be about 200% of its GDP. 

In a parliamentary system, the velocity of change in the prime minsters speaks to the ineffectiveness of the government. In a presidential system, the president is less effective in administering change without a legislature of the same party. This is why Obama might lose and there is nothing he can do about it. Any real change (and I am not talking about a stimulus package- that is not real change) Obama wants to make would require a supportive Congress. We are more likely to see Israel and Palestine come to an agreement before Republicans and Democrats work together.

The Japanese changed leaders because the population believed that recovery was imminent: they had recovered every time there was a shock to their economic growth, like the oil crisis in the 1970s, so when one leader did not effect change he got the boot. Obama cannot effect change without a legislature that supports him. In a parliamentary system like Japan the legislature and the executive ruling party is often one in the same. While there is a separation of the branches in United States and the ruling party of the legislature and executive is often different, the executive tends to get the blame when things go wrong with the economy.

Yes, this is a wild assumption: Obama will most likely lose simply because he doesn't have a silver bullet to fix America.  In actuality, American presidential history supports this theory. No American president since Franklin Delano Roosevelt has been reelected with the unemployment rate above 7.2%.

It has been about twenty-two years since the initial decline of Japan's economy. So what happened to Japan? Nothing good. Japan's economy is still in stagnation today, the Japanese banking system is virtually worthless, and the national debt has become a grave problem. No happy ending there. The expectation is for America to return to its “miracle” economy pre-2007 and it hasn't and probably won’t for a very long time.

The bottom line is that America is in for some freaking hard times and a miracle recovery will not happen between now and Tuesday November 6th, 2012. Unless Obama has a silver bullet that he didn't tell us about, or Romney picks Sarah Palin as is running mate, we probably will have a new president come January.

1 comment:

Anonymous said...

Now we're talkin.

I'm a registered Democrat who wants Obama to win.

When asked what would happen in november I said: "Quality of life will deteriorate to a point where no one feels any incentive to vote.

Obama will lose.

The wealty will build fortresses around their private worlds, civilization will collapse and good Americans will live like Mad Max."

So lets do this!

Lets imagine that he's already lost, but we we were able to go back in time.

Let's pretend this is our SECOND chance.

How does he win?

FDR ended the prohibition of alchohol..(which is what created organized crime in the first place.)

Obama could decriminilize Gage. Don't smirk.

He would get re-elected.

If I were in Obama's position I would be brave enough to face the consquences of making history.

He could improve millions of American lives overnight with a simple gesture.

He actually HAS the power to do so.

I'm speakig from a personal desire...but my point is that he needs to take ACTION to let people know he's with them..and that they matter.

You need a masters degree to get real work these days.

Imagine what its like outside the network of academic mafias.

Entertainment has become useless.

Culture is non exisent outside of television programming.

The situation is horrible.

The republican voter is someone who either doesn't think at all or votes for the wrong reasons.

W. won a second term, therefore this cannot be argued.

He was really stupid AND embarassing. It's over for opposing this statement..anyway.....The republican PARTY on the other made up of individuals who don't WANT thier supporters to think.

How do you appeal to these voters Mr. President?

Let us ALL know that you're not full of shit.



That is all.


Take a chance.

Give us change.

*Having Hillary at the helm doesn't help. Her behaviour during the 2007 primaries was so ugly that it hurt America's concept of what a Democrat is. She should be kept FAR AWAY FROM THE SPOTLIGHT. I'm sure she does a great job. cite her achievments, thank her, then put the Camera back on Biden and Michelle.