Joan, what you are missing is that the US consumer is drowning in debt. so it doesn't matter what Japan 'wants'...it is anyway a flawed plan from the Japanese PoV to somehow want to keep the US bubble afloat 'until we're fine again'. if this is what the plan really is, i guarantee you it will backfire in a big way.
the same goes for Europe. the main flaw in the plan is that the only way for the US bubble and the associated demand by the US consumer to continue to expand is by actually allowing the related credit/debt bubble to expand further, as well as the current account deficit. however, there are simply natural limits to this. at some point, the money printing that is needed to make this plan into a reality will undermine confidence in the fiat system...the demand pull on resources (see oil) will stretch the ability of producers to supply these resources to the limit as well, and eventually, one of the wheels will fall off.
this could be anything...an energy crisis, the blowing up of the Euro or gold carry trade, or simply an inability by the overindebted corporate sector / consumer to incur further debt to finance capital investments/share buybacks/consumption.
we're not in Utopia yet, were it would be possible to let the imbalances grow ad infinitum without consequences.
furthermore, if it should be decided by the powers that be that instead of stepping on the brakes the bubble should be allowed to expand further, the subsequent denouement would definitely be a catastrophe that it would take decades to recover from. imo it is actually possible that the 'point of no return' has been passed already, and that this outcome is already unavoidable. certainly the sheer magnitude and duration of the boom thus far would argue for the bust to be of likewise spectacular proportions.
regards,
hb |
