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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (3427)	3/9/2001 9:01:37 AM
From: Hawkmoon	Respond to of 33421

Japan admits economy is facing disaster FRIDAY MARCH 09 2001 FROM ROBERT WHYMANT IN TOKYO thetimes.co.uk JAPAN is close to financial disaster after running up a huge public debt trying to spend its way out of stagnation, Kiichi Miyazawa, the Finance Minister, said yesterday. Issuing the most serious warning on the economy from a senior minister, Mr Miyazawa called for drastic action to reduce the public debt. “Japan’s fiscal condition is approaching a state of collapse,” he told parliament. “We have to make painful decisions.” It is exceptional for government officials to express concerns about the economy so forcefully, and Mr Miyazawa’s comments triggered a sell-off of the yen. The authorities have poured billions of yen into public works in a largely vain attempt to rescue the economy from its worst malaise in decades. Wasteful spending on airports, dams and roads has inflated public debt to the biggest in the industrial world. In the past ten years it has more than doubled to reach 134 per cent of Japan’s total annual economic output. Mr Miyazawa, who admits that he has presided over the build-up of the debt, did not elaborate on what reforms he thought were necessary but hinted that taxes would have to rise to stave off catastrophe. Alarmed by his candour, government colleagues rushed to put their own spin on his comments. Yasuo Fukuda, the Chief Cabinet Secretary, said Mr Miyazawa meant that “Japan would be in trouble if it didn’t do anything about its finances in the coming ten or 20 years”. But Toshiro Muto, the Deputy Finance Minister, told journalists that Mr Miyazawa was referring to the serious state of the Government’s finances. At one point the dollar rose above 120 yen for the first time in 20 months, helped by a growing view that Japanese authorities will tolerate a weaker yen. Despite Mr Miyazawa’s concerns, the Government is not expected to tackle the runaway debt before the July election for the Upper House. The nation lacks a leader capable of making tough decisions on how to clean up the financial mess. But even though the Liberal Democrats cannot agree on a replacement, the fate of Yoshiro Mori, the Prime Minister, is becoming clearer. After being condemned for repeated gaffes, he has agreed to go, probably next month.

To: Hawkmoon who wrote (3427)	3/9/2001 12:12:50 PM
From: John Pitera	Respond to of 33421

Hi Ron, sshhhh on the Yen-Carry Trade talk..... As the Zen philosopher basho says....... Let Sleeping Dragon Rest -g- I though that was a cool article, but we can remember what happened when the YEN carry trade positions blew up in 1998. goes to show the money goes round and round. Hayami may be looking new angle to the problems. -------While the double-talk out of Japan has pretty much fried our brain at this point, we did find recent comments from BoJ Gov Hayami rather interesting. For the first time we can remember, Hayami actually failed to slam the door on the idea of inflation targeting. While Hayami said that the BoJ is not ready to adopt such a move, he did suggest that inflation targeting may be a viable move once structural reforms settle the economy down. For our part, we wonder if Hayami may be trying to work a deal with the politicians, as he certainly does not want to go down the monetization path without assurances that fiscal policy can help to attract ever-larger and more stable capital flows.-----