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.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: d:oug who wrote (57291)	8/14/2000 1:09:10 AM
From: Rarebird	Read Replies (2) \| Respond to of 116927

Doug, the BOJ believes that raising interest rates will push corporations to make much-needed efforts to restructure and streamline, and thus strengthen the economy in the long run. A stronger Japanese economy is needed to attract capital out of US denominated assets into Japan. Remember that for the last few years the problem has been that, no matter how low the Bank of Japan reduced interest rates, investment did not respond. This was because there was a lack of demand for investment due to companies' weak balance sheets and pessimistic forecasts for capacity utilization. To that extent there has been a credit supply problem for quite a while; the source has been the fragility of the Japanese banking sector and its eroding capital. Taken together, these mean that the positive effects on investment of financial clean-up and fiscal stimulus should be far greater than any constraint put on due to the rise in interest rates. If anything, the rise in Japanese interest rates should be seen as a positive sign because it means that the return on capital is rising. The Gold Currency needs a recovering Japanese economy where capital previously targeted for US denominated assets will now be allocated to Japan, helping to push the Dollar lower and the POG Higher.