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Month: March 2014

First Year of Abenomics Boosts All Economic Indicators

Since returning to office on December 26th, 2012, Prime Minister Abe Shinzo has used his Abenomics policies to target economic recovery in Japan.  The key figures for December 2013 revealed that both business and consumer sentiment has improved since last year.  It has also shown improvements in production, individual consumption, employment and wages, and stock prices.  The Bank of Japan’s quarterly Tankan report also has shown improvement in short-term business confidence among large-scale manufacturers and some major corporations are stating to increase pay.  These good indications hint at the first signs of the positive economic cycle promised by Abenomics and necessary for breaking free from deflation. 

Economist Warns that China’s ‘Bear Stearns Moment’ May Strike Any Time

Recently, China has experienced its first-ever default of a corporate bond and this default has led to the idea that China may experience a ‘Bear Stearns moment’ or a ‘Lehman moment’.  The Chinese solar company Shanghai Chaori Solar Energy Science and Technology Company announced that it cannot pay interests in the amount of roughly $14.6 million on its 11 Chaori bond.  The interest payments were due on March 7th.  Unlike the fall of Bear Stearns and the bankruptcy of Lehman Brothers, Chaori’s default did not change the market’s perception of inherent credit risk in the economy or cause a liquidity crunch.  The reason why Chaori’s default did not impact the economy the same way Bear Stearns and Lehman Brothers did is because it was known for some time that the solar company was in trouble.