Japan's Economic Cancer
This is the 14th in a month-long series of reports called "Making Ends Meet" about how families are coping with the tough economy, unemployment and smaller retirement accounts.
This is the Tokyo that dazzles: a new multi-billion dollar complex of shops and condos. Looking at this, you'd think Japan's economy is going gangbusters. And boy, would you be wrong.
Here's the other Japan: closed shops and wrecked lives. The cause, as CBS News Correspondent Barry Petersen reports, is deflation, an economic cancer that just keeps spreading.
Japan's deflation is a lot about Japan's culture. When the economy started cooling in the early 1990s, companies didn't scale back or lay off. That's not the Japanese way. they kept making products. Make too much of something, and the only way to sell it is to cut the price - at discount chains that are popping up all over the country.
So the cheap stores drove the traditional ones into bankruptcy, like the ceremonial closing of one of Japan's largest department store chains in Kisarazu.
The closing dried up traffic at Tomiko Kanetsuna's China shop that's been in the family for 75 years.
"We're managing to survive, but I don't know for how much longer," she says.
With the bankruptcies came apologies, and sometimes tears, as well as job losses and fear. As stores emptied, the unemployment office filled up.
Economist Ken Courtis watches and worries about Japan and about the United States.
"The Japanese crisis is the biggest threat to the world economy today," says Courtis.
And here's the really bad news: Japan is doing almost nothing to fight deflation, because it would mean massive layoffs, more bank failures and political upheaval.
Instead, the government is pouring millions into failing companies just to keep people working and a sick economy on life support. It's like using a credit card but never paying the bill.
"Japan has not dealt with the issues in the last 10 years, and every day you wait the hole gets deeper and it becomes more difficult to dig out," says Courtis.
So don't be fooled by the glitz. It looks good, but in Japan these days, good looks are hiding an economy facing death by deflation.
Copyright 2009 CBS. All rights reserved. This is the Tokyo that dazzles: a new multi-billion dollar complex of shops and condos. Looking at this, you'd think Japan's economy is going gangbusters. And boy, would you be wrong.
Here's the other Japan: closed shops and wrecked lives. The cause, as CBS News Correspondent Barry Petersen reports, is deflation, an economic cancer that just keeps spreading.
Japan's deflation is a lot about Japan's culture. When the economy started cooling in the early 1990s, companies didn't scale back or lay off. That's not the Japanese way. they kept making products. Make too much of something, and the only way to sell it is to cut the price - at discount chains that are popping up all over the country.
So the cheap stores drove the traditional ones into bankruptcy, like the ceremonial closing of one of Japan's largest department store chains in Kisarazu.
The closing dried up traffic at Tomiko Kanetsuna's China shop that's been in the family for 75 years.
"We're managing to survive, but I don't know for how much longer," she says.
With the bankruptcies came apologies, and sometimes tears, as well as job losses and fear. As stores emptied, the unemployment office filled up.
Economist Ken Courtis watches and worries about Japan and about the United States.
"The Japanese crisis is the biggest threat to the world economy today," says Courtis.
And here's the really bad news: Japan is doing almost nothing to fight deflation, because it would mean massive layoffs, more bank failures and political upheaval.
Instead, the government is pouring millions into failing companies just to keep people working and a sick economy on life support. It's like using a credit card but never paying the bill.
"Japan has not dealt with the issues in the last 10 years, and every day you wait the hole gets deeper and it becomes more difficult to dig out," says Courtis.
So don't be fooled by the glitz. It looks good, but in Japan these days, good looks are hiding an economy facing death by deflation.
