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

To: Stitch who wrote (4500)	6/13/1998 8:06:00 PM
From: MikeM54321	Read Replies (1) \| Respond to of 9980

Stitch, I believe this is a little confusing because we are discussing two issues at the same time. One is the desire for the Japanese citizen to invest their money where it is not only safer, but can earn more, AND the other is a matter of necessity for some Japanese citizens, corporations or their government, to withdraw funds from the US already invested in treasuries, securities, real estate, etc. because they have to due to financial difficulties at home. If you are asking why don't they pull their investments out of the US? Those answers are easy. They want their money in the US because: 1. They can earn a higher interest rates in the US vs. earning 1% in their banks back home. 2. They can make extra money knowing the yen is getting weaker while their money is simply parked here. So they make money off the exchange rate difference if nothing else. Before they weren't as confident the yen was going to get weaker. Now they are. 3. They now know they are "officially" in a recession with no clear end in sight. So their equities markets are not going anywhere while they see ours going to the sky. 4. They see their banks releasing more news each day about bad debt problems and they probably have more confidence in our banking system right now. If you are asking why doesn't the Japanese government simply demand, through their legal system, their citizens to repatriate their money, well that's an entirely different subject (Remember that Rush Limbaugh of Tokyo post I did). I'm not quite sure I understood your question but I hoped this helped. MikeM(From Florida) PS The article below shows one reason Zeev (If I'm not confused by what he said) thinks the US equities markets are still heading higher. ************************************ Wall Street awaits summer rally, seen weathering Asian storm By Pierre Belec NEW YORK (Reuters) - The Wall Street summer forecast: rising stocks that will weather the Asian storm clouds....The experts say the odds are good that the rally will be explosive rather than a disappointing wet firecracker, thanks to the Asians and a strong U.S. econony. They are betting that as much as the Asians hate their own disintegrating stock markets, that's how much they love the rock-solid U.S. stocks.** The worse the situation gets in the Pacific Rim, the more attractive the United States will be to global investors looking for shelter. The Asians have two other choices -- stuff their money in bank accounts or mattresses.

To: Stitch who wrote (4500)	6/13/1998 8:10:00 PM
From: Zeev Hed	Respond to of 9980

Stitch, I am afraid that the situation is a little more complex than just go out and spend. I have mentioned before that it is an error to claim that the Japanese are more frugal than their American counterparts. I have been to an "Executive entertainment" happening in Tokyo, few years back, and I could have run a nice little company for a month with what was spent to entertain these 30 executives for five hours. In any event, the comparison of saving rates is hollow since it does not take into account our pension systems, and our "mortgage" system both of which are saving devices that fully compensate for the apparent differential in saving rates between our societies. I have been preaching for almost a year for lower taxation to stimulate personal consumption and thus final demand in Japan, but who listens (VBG). They should abandon the "fear of the foreigners" that Japan is trapped in, and open their doors to foreign goods. The solution to their problems does however require more then spending, and lavish consumption, it also requires straightening of their financial systems so bank can lend and consumers and small business borrow. They should also rationalize their distribution to lower the final cost of goods (as acquired by consumers). They should also build a Venture Capital infrastructure so that their industrial, commercial and trade infrastructures can rejuvenate themselves on a continuous basis. In this cycle however, I see nothing preventing spiraling down to a very major recession. Any of these steps (and their combinations) cannot be implemented fast enough to do any good. Well, maybe an injection of three time as much as they plan (like $300 billions) into their economy over the next 12 months could stand the tide, but I doubt that they'll do that right now. If they manage to escape a depression by indeed injection of much more into the economy than they are planning to, it would be a great idea for them to adopt some of these proposals now so as to prevent recurrence of the current catastrophe less than five years down the road. Zeev

To: Stitch who wrote (4500)	6/13/1998 10:04:00 PM
From: B Tate	Read Replies (3) \| Respond to of 9980

Stitch Not being an economist my thoughts go in a different direction when it comes to the Japanese resolve/obsession on savings. Towards the humanistic views of why. I assume that most on this thread are like you and I and probably 1st generation offspring of folks who went through the "Great Depression". In my own case, both my parents are still alive ( 82 & 80)and are as frugal as anyone you can imagine. Although they live very nicely on a variety of investments (all are dividend producing)several vested retirement plans and social security they don't trust "the market" or the government. Every time I return my father tells of a new stash or an older one that he had neglected to tell about previously. Examples: Old paint cans full of gold and silver coins (" what robber would get his hands dirty on old paint cans in the basement?"). Door stops made out of silver, painted to look like old bricks. etc. etc. I could write a book about this, in my view, paranoia for cash and hard assets. All of this due to the fact that "the next time we go into a depression we will at least be able to buy a loaf of bread.." For years my brother and sisters and I have encouraged them to travel, enjoy the fruits of some of their savings. Only to be told time and again we are saving for our old age, "We also want to leave you kids in a position to survive another depression." My question is always the same - "when will you be in your old age period?" I believe the Japanese of the same generation have much the same outlook. After 1946 every ounce of energy was expended on re-building a destroyed country. Both economicaly and emotionally it took its toll and left the same resolve to survive first and spend secondly. Not so different than my own parents. Just my ramblings on a quiet Sunday morning Regards bt