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

To: EL KABONG!!! who wrote (534)	7/24/2001 2:11:35 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 974

Kerry, i tend to be less pessimistic about Japan. although i acknowledge the problems are far from solved, and do in fact expect a final , painful wash-out, i don't think the Japanese in general care so much about stock market gains. they have on average only 7% of their savings invested in stocks, a tiny percentage compared to the US. however, the collapse of the Japanese bubble has also destroyed real estate prices, which is far more serious: mortgages taken on during the bubble years are now unsupported by any home equity, a terrible situation to find oneself in. it is one of the reasons why i keep railing against all bubble manifestations in the US, be it in the market or in RE. imo to allow such bubbles to grow to the sky is extremely irresponsible, and the Greenboink Fed has done just that. note re. Japan, that no change in nominal prices of financial assets actually equates to a REAL capital gain, as deflation has eaten away at consumer prices. besides, Japan has a huge bond market bubble going, which makes up a bit for the ground lost in equities. regarding Japan's industrial prowess, i can only say it's a mistake to underestimate it. a huge chunk of the world's hi tech equipment is in fact made in Japan, proof that Japan remains competitive in crucial areas. another aspect is that Japan does in fact have the MEANS to end its predicament. it remains the world's largest creditor, by far. it has a huge pool of private sector savings...REAL savings, as opposed to speculative investments. the problem is really to mobilize these savings...to do so, drastic reforms are needed, and that means even more pain in the near to medium term. i disagree completely with the proposed monetarist solution of simply monetizing the Japanese govt. debt. i think that's a strategy that could backfire badly, as it does nothing to engender structural change for the better. admittedly Japan's problems are very difficult to overcome, and no quick fix solutions come to mind...even the longer term solutions are somewhat in doubt, aside from the fact that the govt. should cease and desist from its interventionist policies and let the market do its dirty , but necessary work. there is btw. an inherent, and not widely recognized danger lurking in a possible Japanese upswing: once underway, it will pull Japan's savings back home. the West, especially the US, would lose its most important source of cheap funding, and interest rates would consequently have to rise, perhaps sharply. something to keep in mind...a Japanese recovery is not necessarily an unalloyed blessing, except for Japan itself of course.

To: EL KABONG!!! who wrote (534)	7/24/2001 3:52:21 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 974

Kerry, Japan's doing okay. They come out to Kiwiland, convert a few yen to dollars [Kiwi ones, with the flightless Kiwi on them rather than a soaring eagle] and have a lot of fun for a week before going back to the salt mines and coal face in Japan for another year of hard yakker. While the Nikkei is down to the same level as 16 years ago, that's not all bad [paper losses from 38,000 notwithstanding - which were of course actual losses for those who bought at the top, but those were corresponding actual gains for those who sold at the top]. The exchange rate back then was 250 yen to the dollar <Now however, Japan in conjunction with the finance authorities of four other major nations, has begun a concerted effort to drive down the dollar. The program was initiated in September1985 and the Japanese yen has been the foreign currency which has appreciated the most against the dollar. In September, when the joint effort was initiated, the yen was trading at a level of 240-250 yen to the dollar. A few months earlier the yen had fallen as low as 265 yen to the dollar. By the end of 1985 the yen had appreciated to approximately 200 yen to the dollar, or an appreciation of around 25% from its low point for the year. > japanlaw.com So, we can see that in US$ terms, the Nikkei is not at all bad. It has increased, while paying dividends, from 11,000 in 1985 to [currency adjusted] 25,000 today. While that's not as hysterically exciting or irrationally exuberant as the Dow and Nasdaq, it's better than a poke in the eye with a burnt stick. In the meantime, Japanese have enjoyed a very wealthy lifestyle. They come to NZ, flick us a few yen and have fun. snowadventures.co.nz They have cellphone systems which make us look like cave men. We buy their used cars and do a lot of car repairs. We supply them fish, which is too expensive for many of us to eat. I don't feel in the slightest sorry for them. They come out here and live in our house and learn Engrish, on our websites too, which are built at $5 an hour: eigokyoshitsu.com and play golf [and get fat - until they go back to the low calorie, low heart-disease world of sushi]. They fill 747s around the world, touring [and sleeping on buses]. Heck, you'd think they won the war! As I've pointed out, they did. Not the bomb and gun war, which they lost, but the far more important chequebook battle where people choose their supplier rather than have it forced on them. Japan is funding a lot of developments around the world. Sure, there is a bit of a glitch in their financial markets, with a few bad debts piled up. But that's life in the fast lane. Remember the US Savings and Loan mess? It was but a glitch in the long run. If you want to feel sorry for somebody, check out Kiwiland, ruled now by Helengrad and as the tears roll down your cheeks as you study our declined state from our glory days in the 1960s, email me some US$ via PayPal! That'll help cheer me up. Click on my name above and email US$ to me - or sign up to PayPal and nominate me as your introducer. Sniff, sniff, sob.... Mqurice PS: If you want to see real emotional scars, you'd best look for more than a ding in a bank balance.