Luc, here's the complete article; i got it from another message board and the poster didn't mention the original source; however, i have heard Mr."Yen" voice similar thoughts already in april. it was reported on CNBC Europe then.
> Mr Yen blows through
> lest the bubble burst
> Asia-Pacific,
> By Peter Hartcher
> It was confirmed during the week that one of the
> world's
> top finance officials, Japan's Eisuke Sakakibara -
> known
> as Mr Yen - is about to retire from his job as the
> country's main international negotiator. But why?
> He told an acquaintance that he decided not to press
> for
> another year in the post because he expected that Wall
> Street would crash during that time, and he did not
> want
> to be around to try to deal with the consequences for
> Japan.
> It was Sakakibara who first conceived the brilliant
> nickname for the US economy - bubble.com. The US is
> vulnerable, he says, to the possibility that the
> internet-led
> stockmarket bubble will burst with awful consequences.
> It would not only drag down the US economy, he fears,
> but jeopardise the entire system of global capitalism.
> It is
> quite extraordinary, of course, that the vice-minister
> for
> international affairs at Japan's Ministry of Finance
> should
> utter such thoughts aloud.
> Apocalyptic pronouncements from a responsible official
> are potentially destabilising. And the Americans,
> Sakakibara's closest and most important allies, hate
> it.
> But his warning does serve as a sobering reminder of
> the
> awesome challenge that the US faces.
> The Federal Reserve's Alan Greenspan is working to
> bring the eight-year US boom to a gentle moderation, a
> soft landing.
> The problem is that history shows hard landings are
> infinitely more likely to occur, producing wrenching
> recession.
> Greenspan's decision to raise interest rates by the
> barest
> possible increment during the week - and then saying
> that
> no more action is contemplated at the moment - shows
> him to be like the comical minesweeper of schoolyard
> humour.
> He is advancing gingerly into the minefield with his
> hands
> over his ears, feeling his way forward with one foot
> outstretched, tentatively tapping the ground.
> He has to expect that his leg might be blown off at
> any
> second and is moving with terrified caution, and
> without
> equipment of any sophistication.
> Greenspan may be the world's most powerful central
> banker, but he is still armed with nothing more than
> two
> old-fashioned instruments of words and interest rates.
> The US is nurturing a technological revolution at its
> economic breast at the moment. That is not in doubt.
> The key question to ask of Wall Street, however, is
> this:
> Are investors pricing the effects of this revolution
> correctly?The stockmarket can only ever represent the
> value of the companies in the economy it represents. A
> simple and obvious point, yes.
> So how do you explain this? The total value of the US
> stockmarket has been the equivalent of around 50 per
> cent of the total output of the US economy, on
> average,
> over the past 60 years. Today it is around 150 per
> cent.
> In other words, the market has historically been
> prepared
> to value a dollar of economic output at 50¢. Today the
> market values that same dollar of output at $1.50.
> Why should this historical relationship swerve so
> violently
> away from standard? Is it possible that stocks today
> could be worth three times the amount of real economic
> activity that they have traditionally represented?
> The orthodox answer is that the technological
> revolution
> is transforming the productive power of that economy,
> and so the old rules no longer apply.
> The Bank for International Settlements, the
> Swiss-based
> club of the rich-world's central bankers, is not so
> sure.
> It is sometimes argued that the effects of recent
> high-tech
> investments may be especially large because they
> embody significant technological advances.
> However, while computers have been a major
> component of recent investment spending, they still
> account for only 2 per cent of the net non-residential
> capital stock.
> Thus, even if the returns on investment in computers
> are
> higher than for other types of equipment, their effect
> on
> aggregate productivity growth has been relatively
> modest
> until now.
> No-one, naturally, can be sure of the future, and the
> BIS
> hedges by saying that computers may become an
> important source of productivity advances in future
> years.
> But until and unless that happens, any pricing of the
> technological revolution must be speculative.
> Sakakibara has to have an even chance of being right
> that
> a surge of money is simply pushing stock prices to
> unreasonable levels, creating that oldest of
> investment
> phenomena, a speculative bubble waiting to burst.
> In this view, the market is valuing a dollar of
> economic
> output at $1.50 not because investors seriously expect
> this to be the correct level, but just because a wave
> of
> hyper-liquidity is chasing a limited number of stocks
> and
> pushing prices to ridiculous heights. And Sakakibara
> has
> seen this phenomenon at close quarters in Japan's
> bubble
> economy of the late 1980s. But it is also possible
> that he
> has other motivations.
> A top official in a rival Tokyo ministry says that
> Sakakibara was not offered the option of another year
> in
> the job, but that he has been forced out by the
> seniority
> system of the Japanese bureaucracy. And officials in
> the
> US Treasury suspect privately that Sakakibara's
> attacks
> on the US may be partly tactical - designed to deflect
> US
> criticism of Japan's spectacular economic
> mismanagement of the last decade.
> One thing seems certain, however. They will not be rid
> of
> him.
> Sakakibara, an extremely accomplished intellectual as
> well as one of the world's most high-profile finance
> officials, will be leaving the ministry in a month or
> so and
> will spend some of his time writing and lecturing,
> including
> during a visiting professorship at the Australian
> National
> University.
> In this new incarnation, the US economist David Hale
> sees Sakakibara emerging as a leading spokesman for
> Asia, an advocate of Asian solutions for Asian
> problems
> and an challenger of US policy.
> The best way for the US to disarm him, of course,
> would
> be by a soft landing. Good luck, Dr Greenspan.
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