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Strategies & Market Trends : Coming Financial Collapse Moderated -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (434)	7/3/2001 8:29:23 AM
From: TobagoJack	Respond to of 974

<<Without a far more aggressive monetary policy and the continuation of large fiscal deficits for some time, the risks of another deep and prolonged recession are disturbingly high.>> "far more aggressive monetary policy" may be what will saved the boomer across the ocean, if the boomers grasp the such possibly coming opportunty to sell everything to the Japanese, and then wait to buy back cheaper ... a sort of Hawaii real estate mania II. news.ft.com Editorial comment: Halting the slide in Japan Published: July 2 2001 18:39GMT \| Last Updated: July 2 2001 18:42GMT The only way one can be optimistic about Japan is by looking at the charts upside down. A banker coined this phrase at the World Economic Forum in January. It is even truer today. As Junichiro Koizumi, Japan's prime minister, continues his visit to the US and Europe, he must be struck by how small their economic difficulties are compared with those at home. On Monday, the Bank of Japan's Tankan survey showed a sharp drop in business confidence. Its measure of optimism fell from -5 in March to -16 in June. National income fell at an annual rate of 0.8 per cent in the first quarter. Unemployment hit a postwar record last week. And consumer prices fell by 0.7 per cent in the year to May, the fastest fall on record. The latest forward-looking assessment from the Bank of Japan is also depressing. The central bank expects weakness to continue in private consumption, net exports, investment, industrial production, corporate profits and prices. Public investment currently bucks this downward trend but it is government policy to stop inefficient public works programmes. Bank of Japan economists place their hope of recovery on exports once US demand for high-technology goods picks up again. That is by no means guaranteed. Mr Koizumi will have his work cut out to halt the slide, although he appears confident that he can. He told the FT on Monday: "Unlike 2-3 years ago there should not be concern about a Japan-originated depression. Should such a situation arise, I shall take bold and flexible policies." But Japan still has only half an economic strategy. It used to have a demand-side policy: increased government expenditure and growing budget deficits but without much in the way of supply-side reform. Now, it seems, the emphasis will be on enforced economic restructuring and a halt to the growth in the government's fiscal deficit. So it has ideas about supply but without a clear policy to sustain demand. Yet the short-term impact of radical supply-side reform is likely to be highly contractionary. Mr Koizumi is right to say Japan cannot recover without reform. His popularity with the electorate has enabled him to get this message across. But the context must also be right. If prices continue to fall, the real burden of nominal debt will rise, placing viable companies and banks under ever greater pressure. Without a far more aggressive monetary policy and the continuation of large fiscal deficits for some time, the risks of another deep and prolonged recession are disturbingly high.