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Gold/Mining/Energy : Gold Price Monitor

GDXJ 101.44

+3.5%

4:00 PM EST

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To: Hawkmoon who wrote (66036)	3/18/2001 12:54:47 PM
From: russwinter	Read Replies (2) of 116756

The first order of business for Japan is more fundamental and basic: Unless they want to end up like Russia they need a banking and insurance industry. Right now they have one only on paper. They are looking into the "whites of the eyes of their undertaker". There are several ways to recapitalize those industries: 1. Nationalize them. However the government already has been reduced to a AA rating and has that 130% debt to GDP. I don't know the exact cost of nationalizing and recapitalizing this mess for the govt, but it has to be well north of 130% of GDP and perhaps another national credit downgrade. 2. Nationalize the very worst, and require the next tier on the deathwatch to repatriate their foreign capital. This would also require a stronger Yen policy to attract some additional foreign capital. Now, I don't know about Japanese attitudes toward foreign partners (and many would correctly be bad news), so they may just have to completely hit bottom (in the classic Soviet Union sense) first. 3. If I were advising them (fun to pretend and I work cheap) I say forget about any nationalization, Japan can't afford the bill for that. Go get our capital from abroad (in as controlled fashion as possible), create at least a nominally higher Yen policy, and attract some additional foreign capital as necessary. Of course a whole other concurrent issue will be free market reform of their closed system. And while I was picking up my first repatriation installment from debtor nations (translate US), I would lecture them on THEIR need to not be overly dependant on foreign capital. Of course the various carry trades (Yen, gold, etc.) get unraveled in the process.

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