To: Raymond Duray who wrote (5493 ) 2/5/2002 11:31:54 PM From: John Pitera Read Replies (1) | Respond to thanks for the link.traditional Keynesian stimulus is simply not what Japan needs at this point. Structural reform is the only credible path to recovery, as it has the ability of to purge the Japanese economy of excess capacity and channel capital to more productive resources.........expect Japan to be particularly sensitive to China's concerns . As we have mentioned before, Japan has largely welcomed yen weakness not only to boost export competitiveness, but also to help dampen the hollowing out of the manufacturing sector. Of course, this hollowing out is exactly the kind of favorable deflation the Japanese economy needs.their inverse relationship with the Nikkei . In addition, it is important to remember that a weak yen and concerns about a return to fiscal stimulus have wreaked havoc on the safety of JGBs , a dynamic that offers further support for thoughts of a sell-Japan scenario. Of course, given that some 80% of Japanese portfolio outflows last year went to the US and Europe , we would keep an eye on the outperformance of European fixed-income on the back of heightened fiscal responsibility.
