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To: Maurice Winn who wrote (9917)	4/17/1998 6:44:00 PM
From: dougjn	Respond to of 152472

<<Unlike factories and other producers which go bust, it doesn't matter too much if property companies go bust - it is just a matter of a few lawyer fees and the mortgagee takes over.>> Sure. The bigger problem comes when the mortgagee is itself broke. That's what happened in the US after the big property inflation of the seventies and eighties. Big bust in 90-91. Things looked gloomy. We developed the Resolution Trust Company to sell off the property and unfreezed the system. Used taxpayer money. Bankers went bust and some went to jail. That is not at all what Japan is doing unfortunately. Instead it is trying to muddle through by the banks being bailed out by each other under order of the BOJ, and the whole system loaning no money, while they try to refloat themselves by investing in US Treasurys at around 6% and paying depositors less than 1%. And lending no further money. Hardly Schumpeter's creative destruction of capitalism. It amazes me that this year, after 8 years of the above, the economy is predicted by many to actually shrink 2-3%. Something in macro management is clearly wrong. Doug