Pushing on a string: Japan encourages further investment in a deflationary era...
Reading Barron's Market Watch, I found this from another investment letter:
ISI's Economy, Money & Markets
717 Fifth Ave., New York, N.Y. 10022
NOVEMBER 16 ~ We got the feeling Japanese policymakers made more progress in the last week alone than they've made in the past seven years. The latest stimulus plan could top $180 billion. The LDP agreed to a voucher plan.
The government will lend almost $1 billion to Nissan Motor. The Bank of Japan has pushed the ovenight call rate well below 0.20%. Last week, the BoJ announced a host of new steps to inject more liquidity, including buying corporate bonds for the first time. The Nihon Keizai newspaper reported that 15 of Japan's biggest lenders will issue preferred securities as a first step in the government's capital-injection program. Even if only part of these moves are ''fresh water,'' they are still significant.
OK- so we lament that Asia over invested, not paying any attention to financial returns, resulting in excess capacity and worldwide dislocations as business tries to adjust.
Now, the fix to the situation, is to do everything possible to get corporate spending (investment) going by direct intervention of the government in the capital markets, pushing cost of capital even lower.
Something not quite right in this picture. |
