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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Brad Bolen who wrote (12951)	1/11/1998 8:29:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

Brad, I am not advocating tax cuts in the US, I am advocating tax cuts in Japan. In the US we have a very different situation, we have interest rates that are a smidgen too high, so in case of a need to budge the economy into a slightly higher growth rate (due to a slow down), there is ample room for clowering them. In Japan they have a an economy loaded with an albartos of bad debts that in essence freezes out lending to productive purposes. There a tax cut should stimulate the local demjand side of the equation, enabling them to restart the economy. However, if they wait too long, there will develop a local fear in the soundness of their economy (right or wrong) and final demand will dry even more., creating a down spiral of drying demand, lower production, and thus a long term subpar economic growth. Zeev