Take Me to the River

It is official. The economy is drowning.

Japan’s GDP Shrinks 12.7%, Most Since 1974 Oil Shock
Bloomberg

Feb. 16 -- Japan's economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, amid an unprecedented collapse in exports and production.

Gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.

Exports plunged a record 13.9 percent from the third quarter as global demand for Corolla cars and Bravia televisions evaporated. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. -- all of which are forecasting losses -- are firing thousands of workers, heightening the risk a slump in household spending will prolong the recession...

It was surmised that the collapse of the system of national-scale vendor financing, perversely labeled the "Bretton Woods 2" system, would adversely affect the governments of East Asia, the collapse in the value of the dollar socking them with huge losses on their Himalaya-sized currency reserves.

Funny, that's not the way things have turned out.

Indeed, both the dollar and the government's assets are fine. It is the export industries and their employees that have been eviscerated.

I wonder how these figures, coupled with Japan's lack of a functioning government, will impact the relative importances of American "partners" versus its "allies" versus its "friends" in East Asia.