Joe, I respectfully disagree. There is no "fix" for Japan. I've said this before. They've grown from the shambles of WWII to the second largest economy in the world. Unfortunately, this is a house of cards. It was built on a domestic asset bubble of incredible proportions. And, of course, in the late stages, you mix in hubris, and buy trophy properties like American real estate (Rockerfeller) and American companies (MCA) at the top.
Remember, corporate earnings are a proxy for productivity growth. Japanese companies have no earnings... or they wouldn't if they hadn't access to a sea of unnaturally easy-to-acquire capital. This is the endpoint of the extremest mercantalist policies in the world. Thus the dumbest, most irrational, most backward domestic economy in the first world.
What does reform entail? Bank problems? Big deal. Set up a bridge bank and have GOVERNMENT eat all the bad loans. Demand problems? Big deal. Have the GOVERNMENT refund every citizen 750,000 yen or so. Government not have money for all this candy? Big deal. Print more bonds. Then monetize it by inflating the money supply. Dollar-yen goes to 300. And Japan suddenly becomes... South Korea.
And you wonder why they are trying so hard to just muddle through. The truth is, you can't handle the truth. |
