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...Alabama has been particularly aggressive. Since the early 1990s, the state has offered German-based Mercedes, Japan's Honda and South Korea's Hyundai a staggering $1 billion in tax incentives, abatements and infrastructure improvements to build plants there. The return on investment has been $7 billion, creating almost 50,000 direct jobs and another 70,000 in sectors like parts suppliers. The population of the town of Vance, where the 4,000-employee Mercedes factory is located, has leapt from 500 to 2,000. Unlike the local sawmill, fertilizer plant or rock quarry, residents feel Mercedes "is going...

Author: /time Magazine | Title: Detroit's Fall Gives Power to Rival Dixie | 12/22/2008 | See Source »

With the exchange rate hovering just below 90 yen to the dollar, and having risen to 87 on Wednesday after the U.S. cut interest rates, the Bank of Japan decided on Friday to cut its benchmark rate to 0.1%. The move was done on a near unanimous vote among policy makers. However, with its overnight rate already at 0.3%, it is unclear what such a small rate cut could achieve...

Author: /time Magazine | Title: As Yen Strengthens, Japan Cuts Rates | 12/19/2008 | See Source »

Despite Friday's move, currency experts say that the yen could possibly climb to 85, which could trigger direct government intervention to halt the rise. Upon speculation that the lower 80s could be reached within weeks, Japan's Finance Minister Shoichi Nakagawa confirmed Thursday that Japan was prepared to intervene and sell the yen, something the Japanese government has not done since March...

Author: /time Magazine | Title: As Yen Strengthens, Japan Cuts Rates | 12/19/2008 | See Source »

...appreciation of the yen slashes Japan's GDP growth rate by 0.3% to 0.4% points, says Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland. "Yen appreciation is also causing the Nikkei [stock index] plunge," he says. And that's affecting the confidence of Japan's businesses. On Monday, figures of the Bank of Japan's tankan survey, a quarterly survey of business sentiment in Japan, fell to a seven-year low. The tankan figure showed the steepest quarter over quarter decline in 34 years. The economy is expected to decline 0.8% for the fiscal...

Author: /time Magazine | Title: As Yen Strengthens, Japan Cuts Rates | 12/19/2008 | See Source »

...strong yen's negative impact on the Japanese economy is "not that large." To have the same effect as the postwar peak in 1995, the exchange rate would have to reach 48 yen to the dollar, he says, because the U.S. economy has experienced 40% cumulative inflation while Japan has remained relatively flat. "If we think about the inflation rate differentials, the yen is not that strong right...

Author: /time Magazine | Title: As Yen Strengthens, Japan Cuts Rates | 12/19/2008 | See Source »

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