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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Box-By-The-Riviera™ who wrote (85179)3/25/2001 6:02:41 PM
From: Jacob Snyder  Read Replies (1) of 436258
 
from Von Baranov:

"Of course the best thing that Japan could do today would be to raise rates to world levels and compete for funds - not very Keynesian. This would drive money out of savings and into spending. It would also improve the
balance sheets of the banks."

He's got this exactly backward. No one in Japan wants to borrow money at 0% interest rates. Raise the rates to world levels, and lending and capital investment would cease altogether. A recession would quickly get turned into a depression. Real Estate and stock prices (the collateral for bank loans) would fall further, which would push the entire banking sector into insolvency (if they aren't already). Consumer sentiment, already low, would go lower, and therefore consumer spending would go lower as well.

He said: "A side note, I would expect consumer spending to pick up in the U.S. as a result of the recent stock market decline".

Again, this is exactly the reverse of what we are seeing. Consumer sentiment hit a 50-year high in 1/00, and has been in free-fall since 10/00. The stock markets hit a all-time high valuation level just after consumer sentiment peaked, and they, too, have been in free-fall since 10/00.

Please don't post more later, this guy (Eric Von Baranov) is very confused.
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