Japan hiccups

Prelude to a global slowdown? Machinery orders plummet in Japan

Published September 11, 2006 4:14PM (EDT)

Rule No. 1 of How the World Works is that everything is connected. So when I saw the Wall Street Journal headline "Japanese Machinery Orders Decline," my immediate reaction was to wonder whether this news would tell us anything about the global economy. The sharpest month-to-month drop in 20 years in orders for industrial machines has to mean something, right?

The key paragraph: "[The drop] could mean the slowdown in the global economy is beginning to touch Japanese exporters. A particular concern for Japan would be if the weaker U.S. housing market discourages households there from spending on Japanese products."

And there you go: from Japanese corporate purchasing orders to the deflating real estate market in the U.S. in about three seconds flat. If you're looking for a reason why this blog is obsessed with the housing bust, there it is: American consumers make the world go 'round. If the home equity ATM machine stops dispensing easy money, then the economic ground starts to shift under everyone's feet.

And as a corollary, if a housing bust equals a consumer slowdown equals a global economic slowdown, then the supporting foundation propping up globalization as it is today gets knocked down. We'll keep tracking this story.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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