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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: Step1 who wrote (2239)	2/7/2000 8:43:00 AM
From: Hawkmoon	Respond to of 3902

after a few years of the same kind of pork barrel style tries, they are running out of intelligent projects FAST!!! Whaddya mean?? They can always build another offshore airport, or build another park. Or maybe they'll get "lucky" and endure another "Kobe" (I know.. that was a sick comment, and you know I don't mean it). I am under the impression that the general public doesn`t buy bonds directly. That would be a reasonable assumption, but I understand that some US$2 trillion equivalent of Japanese bonds are owned directly by the people (probably sold to them by some shiester bond broker back in 1990, who thought that Japan faced inflation problems, and not deflation). And from what I understand those bonds were paying something like 6-7% at that time. Far higher than bonds are paying now, thus the belief that this money will migrate out of Japan seeking higher returns. My main point was that whatever liquid savings that people have in their accounts is now being accessed by the govt due to lack of borrowing interest in the economy. So all of these deposits are accruing interest for the depositor, which comes out of the banks pocket since the JGB bonds that shuffle it into pay very little. So here comes the government to tap into that depositor money, paying the banks a better rate than they would get from owning JGBs, which thus increase their profitability (although artificially). They pay higher rates than they would have to pay for issuing govt bond debt, and the only major reason I can explain this is that they are directly supporting their nation's banks, providing them a customer who will never default so long as they can tax their citizens. As for the Japanese being scoundrels, I think that is evident in every govt. The problem for the Japanese is that they require consensus in all of their political actions. And during a crisis, economic or political, leadership is the key. That is the lesson of FDR. Many of us disagree with his kind of socialist economic policies, but by god, he took steps to deal with the great depression and provided leadership. Leadership and support for entrepreneurial restructuring seem to be lacking, or at least have yet to show their influence. If they are going to mortgage their future, by god at least do it by building technologies that will provide them economic benefit in the future, not just another park or unneeded sinking airport. Regards, Ron