[Chapter 549: Sudden Decline in Demand]
The desert area was thick with the smell of war. Spielberg, at Jurassic Park, had just announced the wrap on his latest film. This guy was as quick as ever, and he never went over budget.
As an investor, he certainly liked this kind of guy. As long as the script wasn't too terrible, the investment would always pay off.
"Filson, is our theater chain on schedule?"
"No, they're moving fast."
"See? I told you outsourcing works. When you let others do the work, it's a different ball game. Those guys are something else. By the way, how's the progress with Morgan?"
"Ha! Demand for iron ore has plummeted, especially in Australia. This time Japan really got it bad, and if things go south, it could lead to a full collapse."
"No way, how come I feel their housing prices haven't dropped much?"
"It's all smoke and mirrors. Those who can't hold on anymore have already jumped off. Suicide has been a popular trend lately."
"Cough, cough, no way, if that's the case, starting a hospital for mental health counseling could be a good move."
Filson knew his boss's dark humor was making an appearance again. Japan's economic downturn had a significant impact on him.
In reality, he should be feeling grateful. Sales for comics and video games hardly suffered. People always sought entertainment; during economic downturns, even as incomes fell, more folks turned to comics and games to pass the time.
The real losers were the bars. Last year, they were bustling; now they were deserted.
With no money, people obviously tightened their belts. Taxis had no business, fancy restaurants struggled too. Convenience stores that operated round the clock took their place.
There was no longer any domestic demand to drive growth, nor any glitzy projects. The sudden stop had wiped out all demand.
It was August already; just a few months until the year ended, and negative growth this year had become a foregone conclusion. Naturally, the big three rating agencies in the United States remained optimistic about the situation. They believed Japan's exports were still stable, and by the first half of next year, Japan's economy would rebound.
"Rebound? Are you kidding me? Filson, don't even bother looking anywhere else. To me, the most telling thing about the current situation is electric output. The numbers you just mentioned paint a clear picture."
"I reckon those three agencies are just talking nonsense. Those financial groups here haven't unraveled yet, so of course, they'll say that."
"Ha! That must be all they can manage, but why is their crude steel output still so high? Don't tell me they're just using it for themselves."
"No, they can't use that much. Lately, they've been ramping up exports."
William White was somewhat surprised. Japan had neither coke nor iron ore, so how were they pulling this off?
From this, one could see how the steel companies in the U.S. were digging their own graves. They had cheap electricity, inexpensive coke, low transportation costs, and affordable iron ore.
With all these advantages, how could they still be outperformed by the Japanese? So, they deserved every bit of the trouble they found themselves in; sympathy was unwarranted.
Of course, the Japanese had remarkably efficient business management. A country with no resources could become a major steel exporter.
Fortunately, these iron mines in Australia were snatched away. If their bubble had burst a few years later, this piece of assets might have been lost.
When demand dropped, prices were bound to fluctuate. Steel and iron ore were both hovering at low levels. The unluckiest were those in Australia, staring at a mountain of iron ore while fretting, "When on earth can we sell this junk?"
An economic crisis in the United States would affect other countries; most nations would catch the brunt of it. Similarly, Japan's current situation would impact many countries.
A bunch of financial tycoons couldn't fathom why, after messing with Japan, their own businesses weren't thriving either.
The fools didn't realize that after the end of the Bretton system, the U.S. no longer needed a trade surplus. What they exported most was actually U.S. dollars. Stimulating consumption was their top priority.
Americans were consuming like crazy while the whole world was producing like mad. That was the situation at hand. It didn't matter how huge the trade deficit was as long as they expanded the money supply.
The funny thing was, if you had known this sooner, why bother messing with Japan? If they enjoyed working, let them keep at it.
After the end of Japan's bubble economy, the U.S. stopped striving for trade surpluses. They recognized that no matter how absurd their deficit was, the U.S. economy wouldn't face significant repercussions.
The power that came with controlling currency was truly frightening.
Understanding the current situation also meant it was time to loosen the purse strings. Now they had to bail out Japan; if those guys went under, it would negatively impact the U.S. economy.
...
"Wow, are you kidding me? I haven't reduced my oil supply; I'm being pretty generous here. Your oil company sold out, and I just made a new purchase."
"Anyway, it's all the same; Rockefeller is worse off."
"You can't compare. That guy is the top tycoon in the U.S., and I'm just some new money family. What's the comparable value there?"
"It's essentially the same idea, just don't intentionally cut back. By the way, aren't you able to apply for some subsidies?"
Alright, William White figured it out; Kuwait couldn't pump oil anymore. Even if Saddam had oil, it was useless; who would want to buy? The U.S. Navy had already blocked the seas.
Two major oil regions were suddenly out of the picture; it would be weird if oil prices didn't spike.
Human greed can sometimes be hard to control. Iraq produced a lot of oil; if they managed their country well, they wouldn't lack money.
This oil-producing region used to be British colony. Without World War II, they wouldn't even know where to dig for sand.
Plainly speaking, with a small population, even if oil prices aren't sky-high, they could still be incredibly wealthy.
What? No money for weapons?
Fine, it's just like the Panama Canal. You're either making money or giving up on military power. If you want both, the U.S. absolutely won't allow it.
Just look at the U.S.'s allies in the desert; they're all a bunch of deadbeats. A troublemaker like the Saddam would never get U.S. support.
Ha, with all this money and a strong military power, how could the world's top dog still have room to maneuver?
*****
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