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To: Stock Farmer who wrote (54994)	9/6/2001 4:08:39 PM
From: Eric	Read Replies (1) \| Respond to of 77399

Hi John Going off topic here but here goes. I actually agree with much of what Mindmeld says. You have raised some good points but I'll toss out my "opinon" for thought. The problem in Japan is people are not spending as much as they did a number of years ago adjusted for inflation. You can have infinite savings but if people in the net net slow down spending because of fear (ala the 1930's) you can precipitate a crash. Japan could have all the savings in the world and it wouldn't save them! We have fear here which is healthy, the sad thing is a lot of decisions made by people at this point are going to be wrong if fear makes them do something. I've heard that the "average American" has $8000 of credit (or to be more precise, revolving debt) to mean really nothing. We have to adjust that for inflation and then in the net net it is only very slightly higher than that form of debt in the 50's. The last time I looked at government statistics peoples actual equity to debt in their home mortgauges was better than it was in the 50's also. Sorry if I have been rambling on but just having a lot of savings doesn't mean anything in the short run. Japan's system is highly leveraged. It is unfortunate that their "Fed" and government legislature has put them into this box. We learned a lot of things in the 30's....are we perfect....no, but I think we are doing a much better job than they are. regards, Eric

To: Stock Farmer who wrote (54994)	9/6/2001 5:43:43 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77399

Yes, I agree with much of what you say. Unfortunately, since we try to make concise posts, often we simplify for the sake of brevity, rather than going into excruciating detail, most of which won't even be understood on these threads. But to say that the cure for the US's ills is saving more is really bad thinking. That's what my main point was. Japan has a host of problems. It certainly doesn't help that they save so much, although from an individual's perspective anyone can surely understand their psychology to do so. I for one am glad right about now that Americans don't know how to save even in bad times, because consumer spending is still one of the good things we have going for us, not to mention tax cuts and rebates. But you are right. If we want to be precise, then it's important to have a healthy balance between saving and spending in order to have a healthy economy over the long term. I'd argue that savings are necessary primarily as a vehicle for capital that can be loaned at a profit to all those promising startups that keep our economy innovating and expanding. One thing to caution you on, though, as I'm sure you are already aware of: it's very important to distinguish what's good for the economy from what's good for individuals. If you mix them up, then you'll often find that thinking in terms of macroeconomics doesn't help you much.