Ramsey, to stimulate demand in Japan, I would make it a "National; Priority", Spend $5 Billion bucks (a very small sum relative to the problem) on an advertising campaign structured to stimulate spending, including, if necessary tax rebates concentrated in one year for cumulative purchase above a threshold, funded from personal savings. I would also swallow the bitter medicine and from the 20 (excusde me 19 now) big banks on the verge of insolvency, I would take down, possibly half and the necessary write offs before the problems become twice as big as it is now, and transfer the left over assets to the other slightly healthier one. Yes stockholders will take a big shaving, but frankly stockholders in those banks have already taken 90% assets write down in the value of the stock, so the left over pain would not be impossible.
But the essence is not just to free the locked up savings, so they can find their way to international market and leave Japan, that is not too wise right now, some of these savings (If indeed there are $10 trillions in those savings, 5% would be close to $500 billion, and that would do wonders to revive domestic demand and soak excess capacity from the rim). Frankly, I think that something of the order of 3% of their GDP injection into the economy from that pool (about $100 Billions) would accomplish restarting the economy. Printing money and wasting money by the government would just cause more of these to go into mattresses and foreign currencies, they need the citizenry to go out and spend it. The Korean melted their gold, for peanuts, I am sure that the right "Patriotic" tune can devised and properly promulgated to make it happen. It is crisis time, and national unity works wonder in such times, even in our country.
Zeev |
