Hello CB, <<If you mean that when a stock loses value, the money goes to money heaven, that wouldn't apply to money spent to buy bonds … >>
We are getting much closer to finding out how much more blood Japan banks have, and whether a fainting spell will send us down the next financial market ledge.
Message 16247633
August 22nd, 2001
Hi CB, … I had always believed that Japan, as the largest creditor nation, is in fact the bank of real money to the world. Whenever folks say to me, “Jay, the banks are not hurt this time”, I invariably respond, “Wrong. The biggest bank is very hurt”.
I get puzzled by Japan … and ask, (a) how deep is the blood, (b) will it ever get painful for the obedient population before the last gush of crimson liquid is out, (c) what can they do, and if nothing can be done, (d) what happens after the last gush of blood is out.
… Japan, as the bank of real savings, holds the key to whether we have a credit crunch or not. A credit crunch supplementing weak global economy will allow us to travel the time machine to 1929 and see if Friedman’s theories work or not.
This, anyhow, is my Pearl Harbor II scenario. And I believe this potential, together with the 6% real interest rate in Japan, is the reason behind the Yen’s strength relative to its history.
Events do not look promising now that Friedman is having second thoughts about his previous, and apparently unfounded, beliefs.
Chugs, Jay |
