It's a matter of confidence

There's lots of reflecting going on at the World Economic Forum in Davos, Switzerland.

And getting to the crux of the matter, the director of the Global Security Research Institute in Keio, Japan, Heizo Takenaka, said “The current situation is something more than a financial and economic crisis,” Mr. Takenaka said. “We face a confidence crisis. Once the confidence of crisis occurs, we need a strong government and central banks.”

Any one from Japan knows of what they speak. A crisis in confidence caused their deflationary recession to last over 13 years.

Chinese Premier, Wen Jiabao, clearly wants to take the optimistic path. “The harsh winter will be gone and spring is around the corner,” he said.

Mr. Wen was also realistic in his assessment, noting the drop in exports and unemployment, but he was clear in his government's 2009 goal of 8% growth. With a stimulus package of 4 trillion yuan, Mr Wen talked about growing domestic demand after "years of being the workshop of the world."




http://www.nytimes.com/2009/01/29/business/29econ.html