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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: borb who wrote (939)	4/26/1998 12:11:00 AM
From: chirodoc	Read Replies (1) \| Respond to of 3902

This much is certain: We are about to get a full-court press from MoF. The rallying call is going to be "BUY JAPAN." David DeRosa: Mr. Yen's Traveling Road Show By David DeRosa Special to TheStreet.com 4/24/98 1:30 PM ET Details of the Japanese stimulus package are dribbling out. One thing we know is that it contains no permanent tax cut -- another victory for the green eye shade crowd at the Ministry of Finance. But foreign investors are skeptical of the effort. The problem, in short, is that the efforts so far don't address the fundamental structural problems in Japan; they merely address the short-term cyclical problems. And maybe not even that. From the first glimpse, it would appear that this is just what Bob Rubin had in mind. It is classically Keynesian -- cut taxes, spend on public projects, and finance the government deficit with debt. Has this sort of policy ever worked anywhere at any time? One year from now, the Japanese may be thinking, "Be careful what Rubin wishes for -- because we may actually get it." But maybe it will jumpstart the economy, who knows? Didn't do much for the United States in the '30s (unless you count World War II as fiscal policy). But it seems to me that the structural problems go far beyond what any jolt of spending can cure. I say that the first and best step would be to get rid of those guys at MoF. This much is certain: We are about to get a full-court press from MoF. The rallying call is going to be "BUY JAPAN." Omi said it. Sakakibara said it. Next, everyone in the government will start saying it. It kind of reminds me of when President Ford tried to contain consumer price inflation by sporting a little red button on his lapel that said "WIN." That meant "whip inflation now." Didn't do a darn thing. Let's put it this way: If all the salesman at Nomura and Daiwa and Nikko can't get anyone to buy Japanese equities, what could this bunch of blustering and bungling bureaucrats do? And to sink the thought home with the locals, Mr. Yen is again today threatening to sell the government's holding of U.S. Treasury bonds. This time he even linked it to intervention in the foreign exchange market: "Obvious Japan would sell U.S. Treasuries if it intervened on dollar/yen." Why is that obvious? Obvious only in the sense that what Sakakibara is telling the Japanese is that they are no longer free to invest anywhere but in Japan! And woe be it to him or her who dares to contradict his edict, because Mr. Yen will be out to flatten them. In case you haven't noticed, he doesn't like the U.S. stock market either -- he says it has topped out. This is a guy on a mission. Meanwhile, back at the Parliament, quite a nasty row has been going on with an opposition member who has accused Mr. Minister Matsunaga and Mr. Sakakibara of having purposively mistranslated the G7 communique with regard to dollar/yen. The opposition points out that the communique says nothing whatsoever about joint intervention on the yen. Caught in the act, red-handed. Now there's a new twist going around markets -- the G7 ministers are supposed to have agreed that U.S. and European asset markets are too richly valued. Hmmm. Wonder who's spreading that one.