Message: U.S. Faces "Painful Adjustment" - Bank of Japan Governor Shirakawa
 BOJ’s Shirakawa Says U.S. Faces ‘Painful’ Adjustment By Michael McKee (excerpts) April 23 (Bloomberg) -- Americans face a “painful” post- bubble economic adjustment, Bank of Japan Governor Masaaki Shirakawa said, drawing a parallel with his own country’s period of stagnation in the 1990s. The U.S. will have to rid itself of excess debt and manufacturing capacity and shrink its financial industry, just as his country did in the so-called “lost decade” after its property and stock-market bubble burst, Shirakawa said in a speech to the Japan Society in New York today. “This will be painful, but inescapable,” he said. “In view of Japan’s decade-long experience, there are no palatable alternatives.” “As economic imbalances pile up insidiously, a narrow focus on price stability makes it more likely for policy makers to overlook dangerous signs emerging in the wider economy,” Shirakawa said. In the aftermath of Japan’s 1980s bubble, bank lending shrank, unemployment more than doubled to 5.5 percent, and the country experienced three recessions between 1990 and 2002. From 1997 to 2007, consumer prices dropped 2.2 percent. In the U.S., prices climbed 29 percent in the same period. “It is not always the case that ‘bold actions’ are judged to be bold afterwards,” he said. “Public capital injections tend to be insufficient and behind the curve.” http://www.bloomberg.com/apps/news?p... |
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