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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: el_gaviero who wrote (54299)	2/20/2006 12:19:40 PM
From: Wyätt Gwyön	Respond to of 110194

You say about Japan’s strategy of exporting to the USA that the Japanese haven’t “ended their addiction .... after 40 years. “Why is that? for a detailed discussion of Japan's mercantilist policy, its history, and future implications, i recommend the book Japan's Policy Trap. amazon.com the main thesis is that Japan single-mindedly pursued this mercantilist policy in the postwar era. the result is that Japan has much more domestic industrial capacity than is required to meet domestic demand, so they are structurally "addicted" to exporting. if they do not manipulate their currency (basically buy dollars, over the long term), the yen will strengthen to the point where this domestic industrial capital stock is uncompetitive, causing a severe depression and deflation in Japan. but of course Japan does not want to face this day, so they seek to maintain the status quo by accumulating ever greater foreign reserves. the main problem seems to be that Japan never really shifted to a service-based economy like we have in the US. (whether that is really better is a matter of debate, but at least it provides a sinkhole for an ever-accumulating pile of cash, and is perhaps a better use than building hundred-million-dollar tunnels between small mountain hamlets through massive corrupt porkbarrel construction projects. also, i think it is not too hard to make the argument that Japanese service economy is very poor, in "mission critical" areas like insurance, RE, investing, etc. that is the argument of the book "Saying Yes to Japan" amazon.com ) has an economic strategy somehow gotten frozen into the structure of Japanese institutions, so that a change of strategy would entail changes in the area of politics ---- with new relationships of dominance and subservience, etc etc? yes, that is what Murphy and Mikuni argue in the above book. basically, i think it will only end in a global meltdown which forces their hand, because the interests are too entrenched. btw, another good (and pessimistic) book on Japan in general is Dogs and Demons. amazon.com