It is amazing that the Yen has strengthened to 80 per dollar. This is causing significant changes in Japan in terms of the outlook for the economy and the structure of Japanese society.
I think the following article is important in describing a few of changes that are almost certain to reshape Japanese corporate structure.
Shimmura, Kazuhiro, 2010. Japan approves extra stimulus spending. The Wall Street Journal, Oct. 26.
At first glance, the idea of more stimulus spending for a country that already has significant national debt equally around 200% of GDP seems reckless.
However, the plan put forth by the ruling Democratic Party of Japan does not include the use of government bonds as a means of financing. The intent of the move is to stimulate the Japanese export oriented economy given the strong value of the Yen.
I think this quote from the article is important:
"The package also comes with government financial support for corporations investing overseas to take advantage of the strong yen.
Backed by government funding, including foreign-exchange holdings, the state-run Japan Bank for International Cooperation will provide loans to private companies, when needed, for business activities in developed countries. Such activities may include mergers, acquisitions and investment projects such as power-plant and high-speed train construction." bold added
This appears to be a sophisticated policy of international industrial development to take advantage of the Yen's purchasing power overseas. It is in sharp contrast to the Chinese policy of pegging the Yuan thus suppressing international purchasing power.
Folks should anticipates more Japanese investment in the United States as a result of this stimulus package.
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