Larry, it is a "confidence" game, as long as there is confidence in the green back we export, things are fine, but just get a run on one of our major banks, and that export will come back as a torrent. And yes, the Japanese have a huge cache of cash, real hard cash earning pittance (including a very big chunk of our debt, the only saving that earns them a fair return). But as I said, it is a game of confidence, and printing money or reducing taxes is not enough, they have to lower their internal costs structure (their distribution must be the costliest in the world) and use normal advertising to increase consumer's confidence. As it is now, any tax savings are going to go into mattresses, and they need it to get into the economy so they can soak some of that excess production capacity with increased final demand. Kenesyan fiscal stimulus is not a bad ideas (unfortunately, they have lost the flexibility of using monetary stimulus), but it should be coupled with "crass" confidence building advertising campaign. Repeat often enough that everything will be alright and the masses will believe it. Scare them with potential "falling off the cliff" scenario and money will be soaked from the economy and find its way into the mattresses.
Zeev |
