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

To: Mark Myword who wrote (4125)	6/2/1998 9:46:00 PM
From: MikeM54321	Read Replies (4) \| Respond to of 9980

Hey now. Some of you guys are making me a little more bearish on Japan than I want to be. I went to find articles on their changing attitudes, but found this instead. Right out of a Japanese newspaper. Full of some very interesting facts and an intresting statment about the US bubble stock market! I edited(shortened) for this thread. No, I didn't make up the title myself. That's the original title! >>At this rate, who knows how Japan will end up? Certainly not the BOJ Hiroshi Ota Yomiuri Shimbun Business Editor The Bank of Japan is in a dilemma over monetary policy. At its latest meeting on May 19, the bank's Policy Board left the record-low official discount rate unchanged at 0.5 percent. But the meeting lasted as long as six hours, indicating that there was heated discussion over economic conditions and their implications for policy. According to a summary of the previous meeting on April 9, the board decided that a further rate cut would be "a rational choice" given marked deflationary trends. But it postponed a policy change, saying, "The next rate cut will be the last." It seems the central bank feared that widening the interest rate gap between Japan and the United States could accelerate the yen's depreciation. The current 0.5 percent level is also the lowest in the history of major industrialized countries. Even in the United States during the Great Depression, the official interest rate was 1 percent. Abnormally low interest rates naturally have an effect on long-term rates. Ten-year government bond yields have dropped to 1.1 percent. Economists say this is a world low since the Italian government loan rate fell to 1.125 percent in 1619. In addition, the interest rates are contributing a bubble overseas. Japan's ultralow interest rates are also affecting New York stock prices, which have hit unprecedented "bubble" levels. Japanese money, which accounts for one-sixth of the international flow of funds, is pouring into the United States in search of higher returns. About 600 billion dollars a year is going to the United States, supporting the economy of the world's largest debtor nation. It is possible that funds will flow back into Japan when the economy improves and interest rates rise.<< MikeM(From Florida)