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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (684)	12/8/1999 7:09:00 PM
From: Glenn Norman	Read Replies (1) \| Respond to of 49987

Yo_Dim Green........... Re:says Shiro Nagata of Norin Chukin Bank's money markets department. Yessssireee Dim, that Shrimpo Nagative realy knows his stuff! Man he is one smart little slanty eyed genius. Do you think if we e-mail him he can tell us how much RAMBUS to short before it goes to zero? I think if you posted these post in Japanese your thread would look a whole lot prettier. your buddy - Glenn!

To: Don Green who wrote (684)	12/8/1999 7:16:00 PM
From: Don Green	Read Replies (1) \| Respond to of 49987

Japan's GDP: No need to get nervous After growing at a respectable rate in the first half of the year, Japan's economy contracted at an annual rate of 3.8 percent in the third quarter - and that's got any number of people worried. But before dreaming up all sorts of nightmare scenarios for Japan, Asia, and the world in response to the unwelcome news, let's look at the fine print - and relax a little. Unexpectedly high GDP growth in the first two quarters of the year was driven by aggressive spending on public works and strong home construction activity spurred by tax incentives, all financed by huge amounts of new debt. The hope was that as the impact of such public spending tapered off, private sector demand would kick in and sustain economic recovery. To some extent that has happened, though not as fast as the government of Prime Minister Keizo Obuchi may have expected. As public investment dropped by 8.5 percent and private sector housing by 3.2 percent quarter-on-quarter in the July-September period, private consumption and capital investment also declined by 0.3 percent and 2.1 percent, respectively. The only bright spot in the picture was a 0.4 percent increase in external demand, with exports of goods and services growing by 4.7 percent due to East Asian recovery and the continuing US boom. But did anyone seriously expect private consumption and capital spending to increase in the midst of determined corporate downsizing and restructuring? That would be a foolish notion. As corporations build down excess employment and capacity, consumption and investment MUST decline before regaining strength. Anything else would merely indicate that at this still early stage in the process corporate restructuring was being aborted. Capital spending still accounts for roughly 14 percent of nominal GDP and will have to decline further, to about 12 percent of GDP, to bring it in line with realistic annual economic growth expectations in the 2 percent range before it bounces back. What is important to note is that the pace of investment contraction is now slowing, that according to a recent MITI survey of larger firms it is going to rise by 2 percent in fiscal 2000, and that even now corporations are expanding investment where it counts - in the critical IT sector on which healthy future growth depends. Much as fretting over the third quarter GDP decline is largely uncalled for, so is the continuing Ministry of Finance fussing over the strength of the yen to the dollar and euro. To his credit, Economic Planning Agency chief Taichi Sakaya said just that in a CNBC Asia interview on Tuesday, in effect endorsing the comment of Bank of Japan governor Masaru Hayami of last Friday that Japan could live with a dollar-yen rate ''around here'' when the dollar was quoted at Y102.60. Sakaya and Hayami are right, and former vice-finance minister for international affairs Eisuke Sakakibara is wrong for suggesting that the MOF and BOJ should be more aggressive in currency rate interventions. As uncalled for are Mr Yen's denunciation of Hayami for conducting confused monetary policies and his suggestion that the central bank governor resign if he couldn't straighten out his act. As the third quarter GDP figures show, Japan needs no low-yen help for exporters and only corporations reluctant to reform are now to be found in the low-yen corner. What needs straightening out is the act of the Obuchi coalition that dreams up ever new ways of trying to please various constituencies by throwing money at them in preparation for general elections. Perhaps Sakakibara - if his bid to succeed Michel Camdessus as IMF head fails - wants to get himself elected to parliament on an LDP ticket as he tried unsuccessfully to do in his younger years. But in any case, with his attacks on Hayami, Sakakibara puts himself on the side of those for whom in-depth reform of the Japanese economy is anathema. If he and Obuchi want to seriously see Japan revive its economy, they should both be pushing for thorough business deregulation, the one element sorely missing if faster and sustainable economic recovery is to be achieved.