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

To: Joseph Beltran who wrote (7145)	10/16/1998 9:39:00 AM
From: Bosco	Respond to of 9980

Dear Joseph - while I am interested in Zeev's view also, my view is that the comparison between Japan and the US is not on the par, both from the character and psychological standpoint. Despite the low interest rate in Japan, lending remains difficult, too much protectionism for the mom and pop setups [on record, I am for it to a degree, but not excessive,] and the attitude of consumption was a new found trend in the late 80s. Uncle Al is trying to head off a lending crunch. While there is still unequal competitions, by far the US has managed better. And more important, just like the fabled Mr Peter Lynch betting on Chrysler, consumerism [like it or not] is in our blood <VBG> best, Bosco

To: Joseph Beltran who wrote (7145)	10/16/1998 9:59:00 AM
From: Henry Volquardsen	Respond to of 9980

Joseph, The US an Japanese public respond very differently to economic stimulus. Japan is a nation of savers, low interest rates have dramaticly cut their income and put them into a shell. Alan Abelson's column in last weeks Barron's had some very interesting comments from Marc Faber on the subject. Americans on the other hand are consumers by nature. It is much easier to prompt them into buying. But there is a more important difference between the US and Japan which bears directly on the credit conditions. The US banking system has been much better at recognizing bad loans, taking the loss and moving on. So once they take the hit they can clean it out and move on. This tends to shorten the duration of a credit crunch. The Japanese however have been terrible at recognizing problems in the banking system. The bad loans sit on their balance sheet like a cancer and prevent them from moving on. In this environment cutting rates is merely pushing on a string. Henry

To: Joseph Beltran who wrote (7145)	10/16/1998 10:42:00 AM
From: Zeev Hed	Respond to of 9980

Joseph, like it or not, Greenspan will have to get help from the fiscal side as well, if we are going to go into a liquidity trap. I don not think we are even close to one. However, the fact that we are running a sizeable budget surplus is part of the reason we might be heading into a recession. Hopefully, there is enough 'consumer confidence" out there that the monetary steps taken (and future rates reductions) will get the consumer back to spending. For one, lower mortgage rates release a lot of buying power into the economy. Furthermore, the housing and automotive industries (major beneficiaries of lower rate in our economy, but not in Japan) could by themselves counter reduction in capital investments by industry. I for one disagree with Fleckenstein (sp) and think that the Fed's move is the right one here and now. I have turned much more positive on the market. I do not see new highs in the Dow in the near future, but the trading range could re-expand back to the low 9000. It will be interesting to see if the soldiers follow the Generals. If they do, we might even have a resumption of the Bull market, IMHO. Zeev

To: Joseph Beltran who wrote (7145)	10/16/1998 11:05:00 AM
From: Cynic 2005	Read Replies (1) \| Respond to of 9980

<<Lowering interest rates has not (apparently) helped Japan with its credit crunch. >> I think it did, in a negative sense. They tried to make-up for the losses in Real Estate market. Gave lots of loans to already debt burdened corporations in SEA and Korea. The rest, as they say, is history. Now, the US lending institutions have an incentive to lend to another type of speculators, a.k.a highly responsible borrowers, instead of just hedge funds. -g- I am sure they will find some.