USA not immune to Japan collapse, US recovery will stall
just read their bank system now is worth minus $1 trillion
that is not a misprint
Japanese banking system in its entirety has negative value
it will require a nationalization
they refuse to allow insolvent dead banks to die
instead, good money is infused into the black hole
the govt has announced in unprecedented fashion their intention to improve exports via a continued devaluation of their Yen currency
next up is defaults
Business Week and other noted publications claim that the US economy is experiencing disinflation, rather than deflation
I think they are WRONG
disinflation is a reduction of inflation
deflation is a trend of lowering asset values
why should the US citizen, spender, or investor care ???
the citizen might take some ugly delight in Japan's misery
the spender should relish cheaper cars and electronic gear, not to mention cameras
the investor should quake, simply quake in fear
this is the second biggest economy in the world
it is failing, dying
its banks are dead but walking, not functioning
Japan's neighbors all are lowering their currencies
all of Asia will export to the US economy their DEFLATION
investors should quake because
- pricing power will be nonexistent
- tech profit margins will not return to health
- stocks are an asset, which will see deflation also
we revel in claiming good times in a global economy
we deny the global economy in bad times, claiming insulation
I believe RRick is 100% wrong that the US will be largely unaffected by Japan's woes
but I respect his opinion
his counter argument focuses on Japan's offshore mfg
it totally misses the domino currency effect on the rest of Asia
i.e. Korea, Taiwan, Singapore, Malaysia, Philipines
these countries have no offshore mfg
the Asian countries will undercut US mfr prices
case in point: Ford layoffs
Rick, arent Hondas made in the US?
yes, but plenty of components are made in Japan still
the likely result of Asian massive decline is a repeat of 1997
first stage was reduced costs from Asian suppliers
second stage was disappearance of profits as deflation struck
economic implications are hard to read
my guess...
first stage will be some real economic US recovery in summer 2002
all this Fed monetary stimulus cannot be denied
unfortunately, most of it is going into foreign hands
with stored reserve currency, with trade deficit
second stage will be failure of that recovery by the following winter/spring
why?
profits will NOT return, stocks will stall, investment will have no rising capital
/ Jim |
