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Politics : Formerly About Applied Materials

AMAT 265.39

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To: Sam Citron who wrote (60215)	2/8/2002 3:23:06 PM
From: runes	Read Replies (3) of 70976

<Care to work through some scenarios?> Yes, but I'm not really a Japan watcher (it gets too depressing). But I'll try to get things started - To me its like the old Godzilla movies - the same ugly monster rears it's head again and again and again. Godzilla I - Institutionalized economy that abhors change. Godzilla vs Reality - Public works spending to try and offset a shrinking economy. Godzilla vs the Enronitis Monster - massive debts hidden in the balance sheet by inflated asset prices. Godzilla vs Political Change - Reform LDP prime minister Koizumi is stymied by his own party. I'm sure that there are many more flicks that I have missed - like the negative interest rates etc. The problem is that the Japanese people are so in love with Godzilla that they never want to see him defeated. Even if he does wreak havoc on the economy from time to time. As for how it will play out - in order of decreasing probability. Scenario 1 - they will keep on silently spiraling down while trying to save face. It will keep Asia anxious and tend to impede their recovery. Scenario 2 - the Yen will keep devaluing which will hurt China and the rest of Asia. That could cause an overly strong dollar which will hurt exports and double dip the economy. Recovery will be delayed well into '03. Scenario 3 - In a fit of despair, the nation commits hari kiri by doing a massive restructuring - bank loans, property values, stock prices. The economic disruption will require massive support from Uncle Sam to try and soften the impact. Bad news for all concerned. Right now I'm holding my breath a little as they seem to be slipping from scenario 1 into the realm of scenario 2.

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