Name that country: surging debt, a rapidly falling currency, a sclerotic political system, and a central bank pulling out all the stops to revive a stagnant economy.
Famous cliff scene from the movie "Thelma & Louise."
If you guessed either Japan or the United States, both would be the correct answer. 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 it's vast economy remains a basket case, right 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. Obama has really put the U.S. on a hole quickly.
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, the is following the same path under Obama. Both countries have debt levels that match or exceed their gross domestic product.
In Japan, runaway public spending has pushed its debt to GDP ratio above 200 percent, while the U.S. just recently topped 100 percent. The state of affairs has ratings agencies ready to downgrade both governments.
With Obama at the helm, it's going to be more like the Lost Decade and a Half. Whoever takes over in 2016 will have one He!! of a mess to clean up. Make G.W. Bush's economy look like a badly run lemonade stand...