JAPAN-Nikkei-Time to go back up? Message Board

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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up?

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To: fut_trade who wrote (1582)	11/9/1998 3:42:00 AM
From: JBL	Read Replies (1) of 3902

Overcapacity is also a result of this resistance to change. Instead of restructuring at home in the 1990's, the Japanese decided to export their way out of the crisis by investing massively in SE-Asia, and taking advantage of cheap labor in these countries. They did so by making very cheap capital available to their companies, and allowing them to work with razor thin margins to gain market share in Western economies and in the Asian economies they were developping. Korea followed the same export strategy. Because of thin margins, they started to bleed red ink as soon as the first dominoes started to fall. Because they did not have the financial reserves that Japan had, their economy collapsed. Japan is much stronger and has huge reserves, but it has used these reserves to maintain the status quo and preserve employment. Restructuring would have been much easier a few years ago, but now that the economy is so sick, it is that much more painful. There is no reason to think that they will take drastic measure to restructure at home until they reach a point where they are forced to do so. We are slowly getting there, but the process will bring them much lower IMO.

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