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

To: Dom B. who wrote (20027)	9/6/1998 11:28:00 AM
From: James Strauss	Read Replies (1) \| Respond to of 50167

Dom: Here is a Snipit from Burke's post: ""The only way to shrink the deficit is to make imports more expensive. This can be done two ways: 1. Lower the buying power of the dollar. 2. Reduce the overcapacity in foreign countries. I am very confident about #1. But #2 may only occur with attrition. For example, as demand grows, over the very long term, the capacity could become normal and stop being a glut. As long as something stupid is not done, such as cutting US rates to increase glut capacity domestically. And, since attrition is a slow process, the odds of us doing something stupid are very high."" ""The weaker dollar could be positive in the sense that it could make for a stronger yen and if one of the causes of weakness is higher Japanese rates. The world economy goes nowhere until the Japanese start spending. They need higher rates to reduce the need to save"" ********************************************************************** I'm in complete agreement that cutting U.S. interest rates will act as a devaluing mechanism on the Dollar... It raises the value of foreign currencies... It makes our products less expensive in their countries and their products more expensive in our country... I disagree with his call for higher rates in Japan... That's what the U.S. did right before the 1929 crash... If we learned anything from those Depression years, it is, you must stimulate the economy when there are signs of Recession... The Japanese don't need more saving, they need more spending... Recessions and Depressions are ended by increased Consumer Spending... The Japanese need a tax cut now... They need a reform of the way they do business that's rife with payoffs and corruption... They need a grand plan for the banking sector that is similar to the bailout we had in the late 80's... They need to give the banking sector a larger spread on their borrowing rates to begin fortifying their balance sheets... They need to start selling off those Real Estate assets held at a fraction of the original loan values... And lastly, they need new blood to make these tough decisions... The current gang in power doesn't have the will or capability to act aggressively and decisively... Jim