Japan's Nikkei Index Hits 2-Year Low Amid EU Fears

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Asian markets are nervously watching Europe's moves on the Greek deficit.


NPR's business news starts with fears of a global slowdown.


GREENE: The fear in the financial markets right now is not just about Europe's debt crisis or the U.S. economy, it's becoming broader, and economists in Asia are especially getting nervous. Here's NPR's Frank Langfitt.

FRANK LANGFITT: To Kiichi Murashima, the debt problems in Europe seem eerily familiar.

KIICHI MURASHIMA: I'm really concerned.

LANGFITT: Murashima is chief economist at Citigroup Japan in Tokyo. He says the current crisis reminds him of the days before Lehman Brothers collapsed in 2008, sparking that year's financial meltdown. Murashima says investors here worry if the European debt crisis spreads, bank-to-bank lending will begin to freeze up, as it did three years ago, and so will business decision-making in the U.S. and Europe.

MURASHIMA: And if this happens, there will be a significant impact on Japan's exports to the rest of the world.

LANGFITT: The European Union and the United States account for one quarter of Japan's exports, everything from Toyota Corollas to Sony PlayStations. Worried about a fall in demand, investors continue to dump stocks today. Murashima says the inability of European leaders to solve the current crisis reminds him of his own country.

MURASHIMA: The lack of political leadership is very similar to Japan's situation in the late 1990s and early 2000s.

LANGFITT: Back then, he says Japan's leaders knew they had to make tough decisions to avoid a deep recession.

MURASHIMA: But politicians could not implement them, because of the lack of political consensus. We are witnessing the same kind of situation in Europe right now.

LANGFITT: What followed in Japan was another decade of economic malaise. Frank Langfitt, NPR News, Shanghai.

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