To: BGR who wrote (20611 ) 3/28/2000 8:20:00 PM From: pater tenebrarum Read Replies (3) | Respond to
it failed so far. btw, there is absolutely no guarantee that raising rates will really hamper the Japanese economy. first of all the talk is going from a ZERO overnight rate to somewhere between 0,15% and 0,25%. that's hardly an earth-shattering move. secondly, it's the one thing they HAVEN'T tried so far. they tried everything from printing to deficit spending and years of near zero to zero interest rates and it obviously hasn't worked. there are a few economists that argue that the course should be changed...by raising short term rates the banks wont find the borrow short/buy govt. bonds route so alluring anymore. perhaps they will decide to tip their toes into commercial lending instead. Japan is in a liquidity trap...in fact that's a bit of a misnomer, as it's probably more of a solvency crisis. unfortunately there's a reluctance to let the malinvestments of the bubble years wind down to allow for a fresh start, with a clean slate so to speak. it's not politically expedient to do that, least of all in consensus minded Japan.
