When It Comes to Economics, The BBC Is Even Dumber Than The New York Times

You would think the BBC editors would eventually get tired of advertising their outright stupidity about economics. Their flavor of the moment is to blame everything including bad weather on the U.S. mortgage industry shakeout.

Get a load of this piece on Japan's economy.

Japan downgrades economic growth

Japan's economy grew by less than previously thought in the third quarter, due to slower investment by firms in new factories and equipment.

So, the Japanese economy grew by less than some people had previously thought it would.

Big deal, I know some people who think Elvis is still alive and kicking. But the BBC can't wait to blame the U.S. for this. They get right to the U.S. bashing in the second paragraph.

The official downgrade added to worries that the world's second largest economy could be hurt by a slowdown in the US.

Then just to make sure you did not miss the finger pointed at the U.S., they do it again a few paragraphs later.

With the crisis in the US housing market casting a shadow over the global economy, Japan's exports are at risk of being hit by a slowdown in growth at its major trading partners.

You see, the idiots running the BBC would have you believe that Japan's entire economy is dependent upon the U.S. The fallacy of this of course is they are totally ignoring the domestic economy in Japan itself.

The BBC editors then come dangerously close to sniffing the truth a little later in the story.

Lacklustre growth and lingering deflationary pressures mean that the Bank of Japan is likely to hold off on raising its key interest rate from the current 0.5% until the latter half of 2008.

Your eyes are not tricking you--the Japan "discount rate" is 0.50% and has been for some time. You see, Japan allows its central banking system, their equivalent of the U.S. Federal Reserve Bank system, to be run by politicians rather than non-political experts.

So, the Japanese politicians set the interest rates at outrageously low levels to look like heroes to the public. The problem with this is it sets interest rates so artificially low that money loses it's time value and you screw up your economy.

In economic circles it's called the "liquidity trap" because people don't even bother to put their cash in banks since the interest rate incentive to do so is not there.

Therefore, their monetary policy is pretty much useless and that causes much more damage to the Japanese economy than anything the U.S. mortgage industry is doing.

So the BBC editors either do not understand basic economics or they do and they are not being honest with you.