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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (37914)	6/5/2000 1:35:00 PM
From: KyrosL	Respond to of 42523

Lots of savings, and little demand for investments due to the long lived recession that, with brief interruptions, has now lasted more than 10 years. Economists are calling this state of affairs a "liquidity trap". Exactly the opposite of what we have in the US.

To: LLCF who wrote (37914)	6/5/2000 2:02:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 42523

DAK, the money supply doesn't explode in spite of zero rates because there's no credit demand in Japan. the money is sloshing about in MM funds with no takers. also the banks are reluctant to lend due to the many bad loans on their books. instead they take the cheap ST money and put it in government bonds to earn the relatively riskless spread. while the Yen was still falling, the carry trade was a main credit generator, but that carry trade blew up in late '98. it may be coming back though, since the BoJ has drawn a line in the sand at 100Y to the dollar. perversely, the constant BoJ interventions have led to a big build-up in forex reserves, that represent a big supply overhang. i admit that the Yen is a strange animal...