Japan deflation

NYT: Once Again, Japan’s Fix Is Short
Prices have fallen for three years in the worst bout of deflation since the Great Depression. Profits have eroded, and companies are having a harder time repaying their debts, swelling the amount of nonperforming loans held by the banks. To keep up, companies are cutting borrowing, wages and jobs, and that depresses spending.

“Policy-making over the past decade,” said Richard Jerram, an economist at ING Barings Securities in Tokyo, “has been all about system preservation and refusal to face up to the scale of the problems, which seems to be where we are currently heading.”