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

To: Hawkmoon who wrote (5531)	2/8/2002 8:44:42 AM
From: Henry Volquardsen	Read Replies (2) \| Respond to of 33421

The Japanese are already turning to gold. That is where a lot of the buying has been. Of course in my eternally anti-gold bug way of thinking it is just another in a long sad line of bad Japanese investment decisions. Interesting debate about whether Japan needs to raise rates. It is the definition of the trap they are in. Higher rates are needed to encourage the huge pool of savings to be deployed domestically. Why accept the credit risk of lending to a suspect Japanese business system for a nominal return when it is just as easy to leave it in the mattress or in zero interest gold. Yet, as you point out, the economy is so fragile that higher rates would severely exacerbate the depression. But the real trap that Japan is in is that by continuing to try to manuever between these intertwined issues they wind up on a program of timid half measures that insures they stay trapped. The Japanese economy is a patient on a respirator slipping further into coma. I fear the only way to break out of the trap long term is to accept a worsening of the situation near term. They cannot continue endlessly postponing the paying of the piper for past mistakes. Doing anything has got to be better than endless drift. At least they can then break out of this policy Sargasso Sea and deal with a dynamic situation with options. It will never happen of course.