Summers isn't bringing Seidman with him. That would be de riguerre. The Japanese invited Seidman independently of Administration officials. They are looking for a way to "save face" and they think Seidman with his RF experience can help them. He probably can in that even though the efforts of the "RTC" were a failure and the problem solved itself and we the people dumped $90 billion into this useless rescue boondoggle, no one cares now. So if the Japanese want to follow our noble example and throw more good money after bad, I guess you can't keep a fool from their money.
The Japanese don't need to borrow in the euro market. Why would they want to do that? Oh, I know, to prop up bad loans in Japan. I wouldn't loan money to a shaky Japanese bank so I guess others won't either. That isn't the way to solve the ailing bank's problem. The way is to force the bad banks to merge, declare bankruptcy, or put themselves up for sale. They also can just stop recognizing loans as assets.
Then there are the solvent Japanese banks, rich and solvent holding more of the useless European currencies than they want but unable to easily dump them without capital loss. Are you saying the Euros won't take the refactorings of their degenerating currencies? So why are premiums on some weaker securities causing the yen to depreciate? They aren't. That isn't the problem, nor is it a problem.
Your problem as it is with most people is that you are looking everywhere for a problem that has been announced abstractly in the press. So you chase everywhere and can't find any reason to explain why Japan has -1% inflation, their unemployment has exploded from 1% to 4%, and their currency is falling. Most countries in the world if not all the rest wish they had it so bad. The reality is that what's happening in Japan is bad for us especially a declining yen which pulls down other Asian currencies. It is also bad for Japan because the oil they consume is denominated in dollars. Their oil bill rises, but this is masked by the slowing of overall demand. When the yen falls and the yuan doesn't Japan slows the purchase of cheap foreign made goods from China. If China devalues, the US buys more from China than Japan. Indeed Japan loses unless they get more efficient or they buy more from the US. They would do that with a rising yen and world competitive prices in the US. The US has to hold the line on compensation for the latter. The only way to do that now is to bring back the fear of unemployment. |
