the.Street.com, Japan, China and economic predications at large...
Can anyone residing in the U.S. accurately predict what our GDP growth, interest rates or inflation will be in the December quarter? How about for 1999? I sure cannot. I have been reading Wall Street economic "research" for years and it typically falls into two categories: forward extrapolation of historical events or some pontificatory hyperbole biased towards Pollyanna bliss or apocalyptic doom. Does anybody remember Ravi Batra's book, written after the 1987 crash, prosaically entitled "the Great Depression of 1990"? This horse's butt sold millions of copies prattling on about the impending end of the world just as the U.S. economy was bottoming out and preparing for a remarkable renaissance.
Four years ago, everybody "knew" that the U.S. budget deficit was intractibly large and ever growing; that our economic future had been squandered on the altar of 1980's profligacy; that our children would be consigned to thatched huts, eating cat food (because of their illiteracy) and working for minimum wage at some fast food burger emporium. Today pundits talk of a "paradigm shift", how to spend the government's coming budget surplus and how Japan will sink into the Pacific. What a bunch of horse poo-poo.
Japan has some pretty significant problems, just as the U.S. did back in the 1980's. Doesn't anybody remember the U.S. banking crisis when Citibank was rumored to be insolvent and every S&L was a candidate for failure? Yes, the Japanese seem to have political gridlock (anybody remember Jimmy Carter?); yes, Japan has a banking problem, the population is aging and the workforce is shrinking (maybe, maybe not, remember Japanese culture has marginalized female participation in the workforce) so forth and so on. Blah blah blah. But despite its problems, this isn't some indigent, third world country populated by illiterate cannibals. This is a rich, powerful and proud country, populated by an intelligent, hard-working and skilled people. As one observing aptly noted, Japan has a brilliant manufacturing sector hamstrung by an inefficient and moribund bureaucracy. Compared to Indonesia, Malayasia or even South Korea, this hardly is an unresolvable equation.
Does anybody remember where IBM was trading in late 1993? Try $20 per share. This proud company had been vanquished by a withering bureacracy, a dying core product line and too many failed, or failing, recovery strategies. Five years later the stock is up five times and the business, balance sheet and P&L have all recovered dramatically. While problems still exist, IBM is moving forward once again. The moral? Big, powerful economic entities have the staying power to resolve problems and recover--but it often takes an actual or perceived crisis to galvanize management, shareholders, governments or an electorate, to force change. So it is in Korea, Thailand and Indonesia (I hope), so it will be in Japan.
Best Regards,
Gregg |
