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.

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

To: fut_trade who wrote (1148)	6/16/1998 11:18:00 PM
From: J. Nelson	Read Replies (1) \| Respond to of 3902

Is it there yen falling or the bonds sold to buy 400 tons of Gold? There is some that say the BOJ is selling U.S. bonds to buy a hoard of Gold and they have tryed to cover it up for some time by using the swiss to do there purchase. Now it seems that the cat's out of the bag IMO. I was reading tonight were the massive amount of 100 billion in bonds was up for sale to purchase a equal amount of Au like the U.S. holds. Anyone wish to tell what they know of this rumor? Regards, Jim....

To: fut_trade who wrote (1148)	6/17/1998 1:27:00 AM
From: chirodoc	Respond to of 3902

Here's where I disagree with many of the economists and strategists out there. Japan can be written off if we could just solve its banking woes. <Picture> <Picture> <Picture> <Picture><Picture> Wrong! Rear Echelon Revelations: Can Japan Be Written Off? By James J. Cramer 6/17/98 12:15 AM ET (Note to readers: This is a primer piece, in plain English, about why Japan matters. I am writing it not for the institutional types out there but for the thousands of confused newer investors who wish that somebody would explain this stuff in a way that makes sense to them. I suggest that the Quickdraw McGraw types out there skip this dispatch for something heavier. I know, however, from trying to describe this stuff in basic form on "Good Morning America" that it's a bit elusive and nobody should feel ashamed if they don't get it.) Why does it matter that a country as small as Japan may be falling apart? The answer is twofold. First, Japan's financial interests are worldwide, far-flung and far exceed the size of that country's economy. Second, Japan is now a "bad actor," meaning that the government isn't doing the things that good governments do in times of crisis. We know this because the worth of country gets measured every day, in the form of its currency. Five years ago, when people thought our country might be bankrupted by our government debt, the dollar was in free-fall. But we straightened out our budget, stopped the reckless borrowing and the dollar has been solid ever since. Japan's yen is going down, though, not because of budget deficits but in spite of them. The world's traders look at Japan and they see the United States in 1930, with Hoover at the helm. Not only is no bold action taken after 10 years of a faltering economy, but now that the economy is in true recession -- two quarters of declining production -- and badly in need of stimulus in the form of tax cuts and giant public works projects, the government is recreating the Hoover do-nothing scenario. There are no Roosevelts in sight. So why do we care? First, we do a lot of trade with Japan. You might want to buy a Nissan instead of a Ford simply because of this weak yen, as it acts like a giant discount, a coupon for lower prices. Imagine that scenario played out everywhere around the world. You can imagine, therefore that Japan can do a lot of damage to everybody's economy with this weak Yen. More important, unless Japan stimulates, its companies will dump product here and everywhere else, instead of absorbing it at home. As Japan's economic output is huge, that's a lot of cheap goods coming at us. Can we write Japan off? Here's where I disagree with many of the economists and strategists out there. Japan can be written off if we could just solve its banking woes. Japan's banks have their tentacles everywhere and we would have a major deflationary event if its banks collapsed. Here's where the frustration with Japan comes in. If you flash back to 1990 almost every large bank in our country was insolvent. We took bold action, closed thousands of banks, merged others and recapitalized the whole industry. If Japan did that, I believe we would be out of the woods. But that's a political decision requiring massive fortitude and a ruthlessness that the Japanese, otherwise ruthless competitors with the outside would, seem to lack. Until we get a bank shakeout, a massive cut in taxes and some sort of reflation, those of us who own stocks will have to live with the threat of a Japanese induced 500- to 1,000-point decline. Could it be more than that? Yes. But in the end, remember, in 1990 the U.S. banking system was in default and the center still held. Believe me, if Japan collapses, the center will hold here, too, no matter what you read. But that doesn't mean that stocks can't go lower because of it. They will. And we will deal. Others will try to tell you there is more to this whole equation than I have stated. I think they are wrong. That's how I am betting