An Economy Unlike Any Other, Not an Extension of the Past

During Japan's period of high economic growth, prosperity for major corporations trickled down to subcontractors and sub-subcontractors. Put simply, when the president prospered, the employees and their families prospered too.
Things are entirely different now; major corporations are squeezing small and medium-sized subcontractors to generate profits. We should expect little from the economy in 2007.
Another point to add is the stark economic disparity between large cities and rural areas.

Let us now turn our attention to daily life. Burdens such as social insurance and taxes are undeniably increasing. Policies aimed at turning a deficit fiscal situation even slightly positive are concentrating on harassing the vulnerable. I believe citizens must realize this soon.
The abolition of the fixed-rate tax reduction, changes to the medical system, the long-term care insurance system—all these, along with increased burdens on the economically disadvantaged such as the elderly, the sick, recipients of long-term care insurance, and welfare recipients, are undeniable.

Consequently, consumer spending, which influences the economy, is not increasing as much as expected. This is a sluggish economy, and we should see few factors that would cause a significant upswing.
Does this sound overly pessimistic? Nevertheless, knowing the truth should be our top priority.

The Influence of America's Unsettling Trends (External Factors) on Japan

The United States remains the world's largest economic power, accounting for one-third of global consumption. However, the U.S. faces various internal issues, and I anticipate its economy will stagnate in 2007.

One factor is the trend in housing investment, which has supported the U.S. economy for the past three to four years.
Unlike Japan's loan system, the equity home loan, which uses a home's equity as collateral, is a mechanism where financial institutions lend money using a home currently being paid for with a loan as security.
Loans have fueled further activity in the housing investment market, driving the U.S. economy. However, this market has hit a wall and is showing signs of stagnation, now acting as a drag on the U.S. economy.

Another factor is the quagmire of the Iraq War. From an economic perspective, war represents the government's largest consumption expenditure. It is the epitome of a disposable economy—a sheer waste.
Since the Iraq War began in March 2003, over 50 trillion yen (converted to Japanese currency) has been spent.

These two factors are weakening the U.S. economy day by day. Yet, it remains a fact that the U.S. continues to be the engine of the global economy.
For Japan, however, a stagnant U.S. economy is a cause for concern and a negative factor. It cannot be denied that this could also drag down Japan's economy.
We must not turn a blind eye to these two worrying domestic and international factors.