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To: Jacob Snyder who wrote (60224)	2/8/2002 11:01:57 PM
From: Sam Citron	Read Replies (1) \| Respond to of 70976

A few comments on your missive on Japan: (1) Maybe all we're seeing here is a shift in where growth is happening. I agree. And I think that growth is largely overrated. Sustainability is at least as important. Growth is a cyclical phenomenon and it always will be. (2) Japan's capacity for "muddling through" seems infinite. There always seems to be one more stop-gap patch-up job that puts off the day of reckoning. Right again. Japanese culture emphasizes harmony rather than drastic change. There will be nothing cataclysmic. They will adapt slowly and find their own way through. Gaijin reform doesn't stand a chance. (3) The future for Japan...Just more "muddling through", while the rest of the world catches up, passes them, and gradually forgets about them. Sort of like what's happened to Argentina in the 20th Century. In the year 1900, Argentina had a per capita income higher than France. Sad that Japan seems to be travelling that same road. Here's where you are spectacularly wrong. While Ezra Vogel's Japan Ichiban hypothesis may seem very dated these days, many of the strengths that he noted are still very much intact. Their civic virtues, low crime rates, education system, aesthetic sense, devotion to quality, social cohesiveness, cultural treasures etc. are unsurpassed. Just look at how Japan has bounced back from the devestation of Nagasaki and Hiroshima. There is tremendous resilience and strength there. Their transportation infrastructure makes USA look like a third world country in comparison. There may be less growth but there is also less inequality. If you think this is Argentina in the making, I suggest you visit Kyoto some time. I think you will change your mind. Sam

To: Jacob Snyder who wrote (60224)	2/9/2002 2:45:54 PM
From: Sam Citron	Respond to of 70976

OT Japan I do not mean to imply that the Japanese banking system does not have serious problems. It does. These problems will probably have to be addressed before the Japanese economy can resume its natural growth rate, just as we had to resolve our S&L mess through the RTC. However, Japan's problems are much more severe. Banks will fail. Jobs will be lost. The Yen will encounter prolonged weakness. Sovereign debt will be downgraded. Japanese are withdrawing cash from banks and putting it into mattresses and into gold. However, I doubt that the financial crisis will persist. There will be structural reforms, albeit slow in coming. Although the financial sector is in smithereens, the consumer is not debt strapped as in US. Household savings are high. The weak yen will help their competitive position and inflate their export earnings translations. I last visited Japan during the "Asian contagion" of 1998 and witnessed less poverty than in USA. As serious as their financial crisis is right now, I firmly believe that they are capable of doing what needs to be done to solve their problem. Sam

To: Jacob Snyder who wrote (60224)	2/11/2002 12:20:17 PM
From: runes	Read Replies (1) \| Respond to of 70976

Jacob - your post on Japan actually scares me more - In my experience problems that hang around forever are the most dangerous kind. They tend to breed a complacency and indifference that leaves us unprotected when the other shoe finally does drop. Case in point - the dot com bubble which has rippled through our markets for the last couple years. Everyone knew early on that things were being done to excess. But as time went on we became complacent. The end result was that, when the bubble burst, it rippled through the techs in far greater magnitude than anyone expected. (NAS 5000 to NAS 1600). (With the exception of Gail Dudak(sp?) who was booted off of WSW by Rukeyser for being a die hard bear.) That being said - I agree that the most likely outcome for Japan in the near term is more of the same anemia. But that doesn't mean that the underlying problem should be ignored or dismissed as manageable. It only takes one or two economic blunders to start a financial avalanche. And with a weakened world economy, such an avalanche could easily propagate worldwide. And the world is increasingly telling Japan that it is their problem, they should fix it on their own. (When Bush Jr visits I doubt that he will even go so far as to toss his cookies on the prime minister ;-). And that, IMO, is what makes the situation so dangerous. Not a crises (yet) but well worth a wary eye.