Roebear:
The IMF precription for cure, in the long-run, is worse than the disease. Adopting measures to restrict credit, and raise taxes upon the citizenry, is a recipe for disaster. So, while the psychological palliative has wrought an intermediate respite, these SE countries ought to adopt a measure S.Korea, apparently, established today.
It appears S.Korea will purchase the gold offered by its people in leiu of selling it to buy foreign currency. This will effectively uncouple the won from the US dollar peg, while retaining all the benefits of a strong currency. I'm extremely pleased to have heard it is being considered, or is in effect. Collectively, the blighted economies caught up in this maelstrom could enlarge the value of their currencies, further weaken the link to the US dollar, drive its value lower, and reappear credit worthy again in swifter fashion than otherwise would be. The economies, however, will need quite a bit of time to adjust; panics like these are not denominated in weeks, but I believe the recovery would be hastened by many months.
Japan is an insular state. Its people have always sought the protection of hoarding wealth accumulated in foreign trade; indeed, you cannot blame them, they are a resource- poor island vulnerable to whomever may anchor their desire to acquire new territory, and subject their peoples to the spoliation of conquest. As such, an economic stimulus package is anathema to the collective will of its people now needed to sever the prolonged economic contraction that shackles them now. However, consumers have lived nine-years in denial; it cannot be long that pent-up consumer demand will prevail upon the system anyway. Indeed, it may encourage Hashimoto's fragile coalition to adopt the stimulus measure just to stave off political annihilation as a ruling coalition.
So, while they took a tentative step to that end in the announcement of late (the insignificant $15bb-dollar income-tax package,) I beleive the government will come full-stride and adopt the $50-$60 billion package required to begin recovery. Should that happen, it will add fuel to the fire, if the others aforementioned affected have also adopted gold in place of the US dollar. Of course, I need not deliberate on where the inflated dollar may go.
Finally, I have but the scraps of recorded history, and common sense available to us all, from which to draw the incomplete conclusions above. It may be very well that none of the above happens, but more likely, some of it will along with many unexpected events. In the end, however, the precious metals will recover in value, as they must, feeding upon whatever news comes along the way to drive them even farther. I'd rather the cycles of time as the wind in my sails than my weak analysis.
Yours, T.V.H. |
