The Cabinet Office's 2008 report on the Japanese economy and public finances says the economy is now at a stalemate. To help invigorate the economy, the report urges enterprises and households to take more risks.
In the case of enterprises, that means embarking on new business projects and involving themselves in mergers and acquisitions. For households, it means pouring more money into stocks and investment trusts. The problem is that, given the severe economic conditions at present, the report does not make a very persuasive case for such risk-taking.
The subprime mortgage crisis in the United States has made financial markets unstable and resulted in a large amount of speculative money flowing into oil and grain markets, thus raising the prices of these commodities and negatively affecting the real economy. Since what is happening is not the effect of a business cycle, enterprises cannot help being cautious.
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