Japan Faces Deep Recession, Central Banks Cut Rates

Asia-Pacific nations kept up the flood of grim news after U.S. data overnight showed private sector employers axing jobs at the fastest pace in seven years, and that the economy, in recession for a year, had deteriorated in the past few weeks.

Japanese companies slashed spending, pushing the economy even deeper into recession than thgovernment had estimated. Australian vehicle sales plunged and the Reserve Bank of New Zealand said it probably would have to cut rates again after a record reduction of 150 basis points on Thursday.

Meanwhile, central banks in Europe are poised to slash interest rates to try to contain a global economic slump that appears to be spreading faster than policy makers in the industrialized countries had anticipated.

“With indicators pointing to an intensifying global adjustment in employment and business spending, our forecast of the deepest four-quarter GDP slide in the developed world since World War Two appears to be on track,” said JPMorgan economists in a research note.

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Archana’s Analysis: As the news says, After US, Europe, its now Japan which is totally swallowed by economic crisis. More cuts in interest rates are likely to take place. Solution to come out of economic crisis has made all big financialists to their edge. If interest rates come to ZERO then most probably Central Bank has to revive the economy.  Actual fact is that cutting down interest wont help much. Further actions are necessary to take place.

Japan Industrial Output Nosedives on Global Crisis

Japanese industrial production dropped sharply in October and manufacturers warned of even more dramatic falls in coming months, prompting warnings that Japan’s recession will be even deeper and longer than previously thought.

The bleak industrial data, combined with sliding household spending and falling retail sales, will reinforce the Bank of Japan’s focus on downside risks for the world’s second-largest economy, but economists remain divided on whether it will cut its already low rates even further, even as the risk of deflation grows.

Japan is now firmly caught up in the financial crisis, with its big exporters such as Toyota and other car makers facing tumbling orders from key customers in the United States, Europe — and increasingly Asia as well….

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Archana’s Analysis: Global crisis are knocking the Asian doors as its already started in US. Crisis are nothing but flow of liquidity in the market. Western countries are going through higher rates of mortgage, debts and credit holder issues and because of that inflow of cash is almost vanished. Money is still in market but its frozen.

As all markets are interlinked globally it affect us as well. This bear rally will be big and hard to digest.  The most affected stock is Real Estate, Fiancial Investment Banks, Automotive Industries. No money, No buyers, and so the production loss, Layoffs. It is a complete cycle every thing is interlinked.