Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: dwight vickers who wrote (20195)	2/22/1998 12:54:00 AM
From: Paul Fiondella	Read Replies (3) \| Respond to of 42771

(Off Topic) The true state of Japan's economy -1- Japan's fiscal stimulus policy as announced on Friday is equivalent to 1/4 of 1% of GDP. In the opinion of one MIT economist a tax cut equivalent to 3% of GDP is needed to have any effect in stimulating the economy. -2- The yen is sinking again. Why? Because money flows where the profits are expected to be and they aren't in Japan. -3- Japan's total debt including unfunded pensions in now 200% of GDP. Part of the reason the Japanese government is afraid of more deficit spending. -4- Japan's total BAD debt is now 15% of GDP, a minimum of $620 billion. Japan's government has no intentions of closing down banks and is publicly committed to preventing the collapse of any major bank. You can imagine what will happen if it can't prevent a major bank failure when and if that happens! -5- If everything goes well Japan putters along at a consensus estimate of 1-1 1/2% economic growth for the fiscal year beginning April 1998. That's the best case scenario. -6- If something goes wrong (a series of major corporate bankruptcies or bank failures) Japan will go over a cliff and take Asia with it. -7- The Japanese economic stimulus package is DOA. Most economic observers feel Japan is drifting toward chaos something like the way Europe drifted toward a general war in 1914. Nobody particularly wanted it to happen but it happened anyway because no one had the will to stop it. -8- The US Treasury is getting desperate on the trade front. The import of the G7 meeting is a demand by the US to get Japan to accept more imports from Asia to take pressure off the US of this flood of imports that is coming our way. But the Japanese cannot do that without stimulating their economy and they do not have the stomach for a major government fiscal deficit and are planning to export their way out of any slowdown just like the rest of Asia. It looks like beggar thy neighbor with Washington left holding the biggest trade deficit bag of s--t. -9- Moody's downgraded both Chinese and Hong Kong debt Friday. This means short term interest rates there will go up and international borrowing will cost more. In China the yuan is now considered to be implicitly overvalued by Moodys. A recognition that China's economy is weakening and what the currency traders on the streets of Shanghai already know. Gosh I wonder how long our new friends in Peking will hold off a devaluation. I'd say until the next crisis in Hong Kong. -10- Three more days of rioting in Indonesia as Suharto reshuffled the generals in the Defense Ministry as he looks for a scapegoat. Better not be a Chinese scapegoat say investors in Taiwan, Hong Kong and China. Suharto has few friends left outside of the Clinton White House. Does a prolonged economic slowdown in Asia lie ahead? Its impossible to have an Asian recovery with Japan's economy in recession. We will definitely know if we see orders being cancelled by Japanese companies and capital spending cuts being announced like Hitachi's. I suppose we should also look for insider selling increasing in American companies to really know when the problems have hit home. I believe Greenspan testifies before Congress Tuesday. Now I wonder if Greenspan is sick because he has no stomach for what must be done---telling them that it is a fantasy to believe we can continue to grow as we did in 96 and 97 in 98 with all of these imports coming in and all of these economies going into recession or worse. I don't think he was up for joining Rubin at the G7 in the phony twist the Japanese arm cover your ass campaign. Will he be up for telling Congress the truth about the economy? I wouldn't like to be in his shoes when the bubble bursts. Will Greenspan end up the American scapegoat despite his best efforts? =========================== Oh I forgot to mention Russia. Dead broke and living on IMF loans. This could be the year that Russia collapses. It has been in a real economic depression since 1991. They put all their hopes on an influx of foriegn investment. Then came Asia. Well I suppose we can all learn to pronounce Zuganov. Its Zoo gone off. He's an admirer of Stalin and a nationalist and Great Russian chauvinist to boot. Wouldn't that bring it all back home again.