JB,
I'm responding to your post on Ike's thread here, out of deference to him:
What? Pudding is not an option?<G>
Point well taken, Joe.
For those of us who (like me) are struggling to understand the connectionbetween Japan's economic crisis and, our economy, and the price of gold, here's a bit from Hahn's market commentary last night:
pdated: Thursday, March 8, 2001 9:04 PM
Japan's Secret Hope for Inflation
The Japanese Finance Minister spoke the words of looming financial crisis that set into motion a panic of
sorts. He said, Japan's fiscal condition was “quite near a state of collapse”. The solvency of many
Japanese banks is in question because of the effect of weak equity prices on the banks' portfolios. For all
practical purposes, Japan must strive for an inflationary environment to jump start their economy. There
aren't many other options. To ignite inflation, they need to find a way to devalue the YEN. To
accomplish this devaluation in an open way would invite devaluation by China...and then Thailand....and
then Brazil....etc., etc. This domino effect will scramble international loan agreements and start a trade
war. These are the early stages of an international financial crisis.
The Japanese Prime Minister, Yoshiro Mori, has resisted calls for his resignation. As long as the current
political leadership is in power, there isn't likely to be meaningful progress towards restoration of
economic vigor. A crisis in Japan would force Japanese investors to repatriate dollars from the United
States bond and equity markets. That outflow of money would be devastating to the indices. </> |
