Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (52412)	5/27/2000 8:59:00 PM
From: Haim R. Branisteanu	Read Replies (2) \| Respond to of 99985

Japanese bean-counters cooked numbers By SCOTT STODDARD, Associated Press TOKYO (May 26, 2000 1:05 a.m. EDT nandotimes.com) - Japan's economic mandarins were stumped. While revising the country's dismal growth numbers for the final three months of last year, they ended up with inexplicable data on capital spending that would have made the situation look even worse. So they left the data out. The government's recent admission that it omitted the spending data while compiling some of the world's most closely watched economic measurements underscores a perennial problem Japan's economy: unreliable statistics. The main problems for Japan, analysts say, is a dearth of bureaucrats trained specifically in statistics and a lack of oversight to make sure that numbers for the world's second-largest economy are crunched correctly. "The data quality is extremely poor and they constantly find themselves with the need to make big revisions," said Brian Rose, senior economist at UBS Warburg Securities in Tokyo. While such problems also occur in other countries, Japan's economic numbers are examined especially closely worldwide for signs that the country is recovering from a decade of malaise. And Japan's Economic Planning Agency couldn't have fudged a more closely watched figure: gross domestic product. The government originally announced that GDP - the main measure of economic growth - dropped 1.41 percent the October-December quarter of last year. That statistic was bad enough. But when EPA officials were working on their first revision, they came across a startling number. A previous survey of capital investment by Japanese banks, brokerages and other financial institutions found a drop of 3 percent for the quarter, a subsequent poll showed a massive 37.7 percent plunge. Japan's top bean-counters suspected they had made a mistake. "The discrepancy was so big, we weren't sure we could rely on the data," said Masaaki Maruyama, head of the EPA's national expenditures division. "So we decided to leave it out." The limited revision left Japan with somewhat less ominous GDP numbers. The revised GDP for the quarter announced May 11 had the economy shrinking by 1.43 percent. Including the capital spending plunge would have pushed that number up to somewhere between 1.6 percent and 1.7 percent. The worse-than-expected figures will make it more difficult for the government to meet its goal of 0.6 percent GDP growth for the fiscal year that ended March 31. But officials and analysts say that political gain was probably not a factor in the decision. Though the unpopular government of Prime Minister Yoshiro Mori is heading into elections June 25, the revision of the figure either way is not seen as a factor that would influence the way many Japanese would vote. The problem instead seems to simply show the bureaucracy needs better training. Statistics gathering is a low priority in the national budget, and finance officials typically stitch together data culled from various ministries that might not be optimum for calculating GDP, critics say. "It's a difficult job trying to piece together the garbage they have to work with," Rose said. "This situation has gone on for decades." But some economists point out that other countries, including the United States, where there is no shortage of professional economists trained in statistics, also have trouble getting the numbers right. "There's bad data in every country," said Jesper Koll, chief economist at Merrill Lynch in Tokyo. "With Japan or any country, look at the number of revisions."

To: Haim R. Branisteanu who wrote (52412)	5/27/2000 11:33:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

I agree with you that inflation may be ignited by bad fiscal and monetary policies, but these are not the only sources of inflation. Inflation was around in times where they were no monetary and very little fiscal policies. Once you tie the monetary base to a commodity whose supply growth is limited, you engrain inflation in that system, or limit the growth of the economy to the growth rate of that commodity. It is really simple arithmetics. Do a simple mental exercise, during periods of extreme deflations, does the total amount of gold backing currencies (in those countries where such conversion was the law, like the US and the UK in the 19th century) decline to reflect this deflation? It does not, but its price may decline with all other commodities. If you keep that commodity in dire supply during period of growth, a smaller stock will have to cost more money (assuming constant money velocity), thus inflation. Zeev Zeev