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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (212)	12/28/1997 6:44:00 PM
From: Aloysius Q. Finnegan	Respond to of 9980

Too late Tommaso ... they already bought up all the timber in Oregon. They haul it out by the shipload. Patrick

To: Tommaso who wrote (212)	12/28/1997 7:57:00 PM
From: Rational	Read Replies (3) \| Respond to of 9980

Tommaso: The Americans like to prescribe a recipe (like printing more yen) that will benefit them the most. Every country does that. But, Americans have a sway over at least the SE Asians. Might is right! Do not forget, however, that Japan is the second largest economic power house and Japan is a part of this might! Japan was instrumental to have IMF bail out SE Asia because Japan has a greater stake in these countries than the US. Keeping on the shoes of the Japanse, I do not see how printing yen will make them more prosperous. It will instantly raise inflation and, responsibly, the BOJ will have to concurrently raise the interest rate. This nominal policy shift should have no real consequence in the economy; this is rational expectations! Sankar

To: Tommaso who wrote (212)	12/29/1997 6:03:00 PM
From: Geoff Nunn	Read Replies (2) \| Respond to of 9980

<<Maybe they should just print Yen and buy gold with it. They need to import more, and gold would be the easiest thing to ship in. Since no one else has a solution I just thought I would make one up! >> Tommaso -Before you can say no one has a solution you must explain why tax cuts aren't one. Haven't the Japanese ever heard of supply side economics? A big-time tax cut on both businesses and households would stimulate Japan's economy by raising the return on productive, wealth-creating activities. Contrary to popular opinion a tax cut need not be self financing in order to be beneficial. High taxes drive a wedge between producers and consumers, and between employers and employees, and between savers and investors. Reducing these wedges would promote economic expansion.. Even if the added tax revenue generated by this expansion is insufficient to finance the reduced revenue resulting from lower tax rates, there is still a benefit. Real incomes will rise due to improved economic efficiency and wealth creation. If the govt borrows funds in the bond market to pay for lowering taxes, that can pose problems if it is not handled properly. Long term a balanced budget is a worthy goal. But as recent experience in the U.S. is showing, It's a darn sight easier to balance the budget when the economy is healthy and growing than when it is stagnant. Regarding your suggestion that the Japanese buy gold and hoard it, with all due respect that's just about the dumbest idea I've ever heard. Gold is a sterile asset ( sterile in the sense of being unproductive). It produces no dividends, no interest, no profits no rents. The price would have to rise by the international rate of inflation merely to avoid losing value in real terms. The price would have to do more than that, it would have to rise by the rate of interest on things like U.S. Treasury Bills, for Japan to breaks even ( i.e. cover the opportunity cost of holding it). It seems to have been quite a few yrs since gold met either of these tests. Best of luck to you. GN