Japan's Falling Prices.

I had listened one podcast:
BBC Daily World News Service / 23.04.2010 /
http://www.bbc.co.uk/iplayer/console/p0072p37

I had listened only the first part of the podcast, as the second part isn't relevant to the Japan economy. Though there had been some difficulties while understanding the whole podcast, the news seemed  too interesting to me. I had also faced some new and unknown words while listening. Even there had been unclear words, that I hadn't been able to understand at all.

So, I thing this news to be interesting for you, and suggest you to read the following article.

"The land of the rising sun seems faced to be the land of falling prices".
As we know falling prices hit company profits and they face real increase of the burden of debts. The price falling in economy deters new investment, too. In this deflationary (anti-inflation or price falling) period in Japan, prices are falling and people prefer spending. For ex., in the center of Tokyo, in front of some restaurants appeared long queues of people, who are ready to pay for cheaper lunch. Of course, this assures the restaurants making more profit, according to the location (center, far from center, ... ). Even one of the restaurants is thought to get a 40% increase if profit from the usual time. 

And, why Japan seems to do nothing against the following prices? 

As it's clear, consumer savings are the main factors, that cause the crisis. And when prices were high in Japan, consumers' expectations were so low that, they didn't want to spend, but preferred simply, to save their money and as it was mentioned, this was a real problem for the Japan economy. But now, Japanese prefer spending to saving, and this means, there is no another real crisis problem for Japan. In other words, the situation is likely to be good in the rising sun country. But this is WRONG! 

The fact is, falling prices cause another problem: "Government debts". When a similar situation happened in Europe, after 2 years governments faced very great debts. The question is, "Will the same occur with the Japan government and economy?" 

The opinions of experts: 

Japan created great welfare in 1980 - 1990 period. Then Japan had been able to cover all government debts thanks to the banking deposits. That's why, now Japan doesn't feel any urgency to treat the "problem". In reality, it's going into debt. If Japan can't finance its debts, there will rise a great problem . "Great crash of Japan is possible. And between next 5-10 years there might be implosion in the Japanese economy".  

What possible ways of treating the problem does exist? 

Though,  Japan owns the II biggest economy in the World, it also has some negative sides. One of them is "Japan's constancy". Of course, it is developing, it makes difference, but it doesn't change the economic system, that is related to Japan's ancient culture. In Europe changing had given good results. And Japan might simply change for solving the present and future problems. 

                       
                                        Thank you for attention!