Japan’s ‘BP Moment’ Troubles Global Economy (William Pesek)

Mar. 20, 2011 (Bloomberg) -- You never want to kick a nation when it’s down. It’s time, though, to consider the depth of Japan’s coming recession.

A week ago, before radiation fears prompted a mass exodus from Tokyo, a downturn was of the “if” variety. Japan’s prospects then dimmed with each passing day of blackouts and panicked news reports. The questions now are when the recession will officially begin, how bad it will be and when might it end?

There’s this bizarre notion that Japan’s crisis is a non- event for the world economy -- that at just 9 percent of global gross domestic product, Japan’s zigs and zags mean little. And besides, it’s thought, the Group of Seven stepped in to cap the yen and all’s well again. Perhaps. Yet Japan’s near-term trajectory may surprise the global bulls out there.

The G-7’s intervention halted the yen’s rally to a postwar high of 76.25. It was a rare success for a grouping so out of its depth as America’s economy burned in 2008 and Europe’s debt crisis heated up in recent months. The G-7 showed that multilateralism may be making a comeback.

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