Japan and Europe are Tanking

An article in today's Washington Times by David M. Dickson points out that Japan's GDP diminished at an annual rate of 12.7% in the 4th quarter of 2008! This is partly because Japan's economy is highly dependent upon exports, as is Germany's. Germany's GDP shrank by the annual rate of 8.1% in the fourth quarter. In comparison, the U.S. GDP shrank at an annual rate of 3.8%. Of course, the actual declines are 0.25 times the annual rate for these 4th quarter results and it is really more legitimate to give the actual reduction for the quarter, but this is rarely done. So, I will continue to use the annual rates for the quarter as the article does here.

In comparison, the 15-nation euro-zone had a GDP decrease in the 4th quarter of 5.9%, which was also the rate of decrease in Great Britain. The decline in France was about 4.5%, while that in Italy was a shade less than 7%. These last two declines were read from a graph, which is why I give them as approximations. Canada is the only nation of the G-7 which had a smaller loss than the U.S. Its loss was approximately 3.0%. Canada even had growth of about 1.25% in the 3rd quarter of 2008, when only France of the G-7 had growth. In France's case, the 3rd quarter growth was only about 0.3%.

So, overall, Japan and Europe are doing very badly, while the NAFTA countries of Canada and the U.S. are doing comparatively well. Japan in particular looks to be ready to plunge even more rapidly into negative GDP growth in the present quarter. Apparently, subsidizing export industries is not always a winning strategy, observed Peter Morici, a business professor at the University of Maryland and a former chief economist at the U.S. International Trade Commission. The Nikkei 225 Stock Average is down nearly to half of its 52-week high. It has dropped 13% this year compared to the 11% drop of the Dow Jones Industrial Average in the U.S. The Japanese Research Institute is projecting a 20% decline in the first quarter of 2009! Toyota is reducing car production for the domestic market by 54%. Apparently, the U.S. Big Three Auto Makers are not the only auto makers in a world of hurt.

As usual, it is up to the U.S. to pull the world out of recession. As usual, we will do this, with a bit of help from our relatively intrepid neighbors in Canada. Of course, I am assuming that the Obama-Pelosi-Reid axis of idiocentric evil is not quite up to the task of driving the U.S. economy off the cliff. They will do their best, but probably we will just wind up in a ditch. Then tens of millions of productive, innovative American private sector workers will find a way to repair the damage and get the car back on the road, with some loss of valuable time and dragging a trailer full of additional welfare recipient deadweights.