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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (19221)	8/10/1998 8:44:00 AM
From: jayhawk969	Read Replies (2) \| Respond to of 50167

IQ, This morning's WSJ had a front page article on the "Wealth Affect in Japan". The following are excerpts: "People overlook how long it takes to get over a wealth shock" on the negative side, says Roger Kubarych, chief investment officer at Kaufman & Kubarych Advisors LLC in New York. He notes that the U.S. Depression triggered by the stock-market collapse of 1929 didn't really end until 1940 or 1941, when the U.S. began gearing up for war. Similarly, a long hangover from the bursting of Japan's stock-market bubble in 1990 is causing many of its economic problems today. At the time -- and even as late as 1993 -- most Japanese economists denied that a negative wealth effect was about to drive them down. They contended that even though the stock market's decline reduced asset values -- of both stocks and real estate -- by 60%, they had paid so little for them that they were still above water. But that view has been refuted by events. The impact of the wealth destruction in Japan eventually became profound. I recall the economic crash that occurred here in Dallas in 1985. The wealth destruction was probably the worst the region had seen since the Depression. It was a result of the first oil, second the fall of the Texas Banking Industry, and thirdly the collapse of the oversized real estate market. A significant portion of the paper wealth in this region was destroyed. It was not until 1995 that the region started to feel the recovery. Yes it took ten years and with significant outside help. Significant corporate relocations like JC Penney's, significant outside investment in Real Estate, and a burgeoning Telecom Corridor, were all necessary to restart the regional economic engine. Japan's issues are just as deep and complex. The more I think about it, the more I am convinced that it will take external stimulation to pull them out of this rut. J.D.