Feb. 25 (Bloomberg) -- Japan’s exports plunged 45.7 percent in January, resulting in a record trade deficit, as recessions in the U.S. and Europe smothered demand for the country’s cars and electronics...........


“The drop in exports is unbelievably bad,” said Yasuhide Yajima, a senior economist at NLI Research Institute in Tokyo. “The pressure on companies to cut jobs and investment is rising and that will make the recession deep and protracted.” ...........


Japan is the world's second-biggest economy. That's the everyday economy bit. Here's the financial system bit :

The Bank of Japan last week said it will buy corporate bonds for the first time, widening its asset-purchase program to prevent a shortage of credit from deepening the recession. Governor Masaaki Shirakawa and his colleagues lowered the bank’s overnight lending rate to 0.1 percent in December.

The world's major central banks used to have nice clean balance sheets, just containing government bonds. Now they're starting to get cluttered up with all kinds of rubbish, low grade crap and corporate stuff. They have to buy the corporate stuff because corporations can't roll over their debt to commercial (bankrupt) banks and so the central banks are the lender of last resort, keeping the corpoations from shutting down large chunks or all of themselves. Balance sheets of major economies' central banks are now looking like those of third world countries and banana republics. This is not good at all.


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