>But Japan's elites have spent close to $750 billion over the
>past five years, in various mongo bailouts/tax cuts ("bribes" would be a
>more accurate term, but we'll let that pass) to the business sector.
But these expenditures were poorly targeted and not enough, so we shouldn't let that pass. They desperately need to socialize the financial system's losses so people can go back to borrowing & lending like normal postmodern capitaalists, just like what the U.S. did in the early 1990s.
According to IMF estimates, Japan's structural deficit (at some mythical full employment level) averaged just 2.3% of GDP between 1993 and 1997, which was just routine stuff for the U.S. during the Reaganbush years. Worse, they've cut that deficit by two full percentage points - from 3.8% to 1.8% - between 1996 and 1998. Their tax increase last year has to count as one of the stupidest pieces of economic policy making in history.
>Japanese Government debt is now around 90% of GDP, much higher than the US
>or many European countries;
Yes, but lots of that debt is held by the government, too, namely the postal savings system. Japanese net government debt is 27% of GDP, compared with 45% for the U.S. and 50% for Germany. They've got the money to spend, no question about it.
Of course, this is where Rakesh should step in & remind me about the fundamental contradictions.
>Japan has actually deployed, with
>little fanfare, a titanic Keynesianism in the last few years (lest anyone
>start spouting chrysanthemum-and-sword metaphors, it should be pointed out
>that Germany has spent close to $800 billion on the bailout of East
>Germany during the same period, with an equivalent lack of press).
Again, those IMF estimates make the German spending effort look a little less heroic - an average of 1.5% of GDP in structural deficits between 1993 and 1997 (caompared with 1.3% for the U.S. over the same period). Germany, too, has been throttling back on the red ink, from 4.0% of GDP in 1992 to 2.0% in 1995 to 0.8% in 1998.
>the Dow is beginning to look a mite tetchy, yes?
That it is. I've been extremely cautious about saying things like this over the last several years, out of a morbid fear of Chicken Littleism, but I think the great 1982-? bull market is in its endgame. One reason: wages are rising but prices aren't, meaning profits are being squeezed. (Wages in the retail sector are actually up about 3% year-to-year, while prices are down by over 1%.) The GDP accounts show profits down for two consecutive quarters, which is rather odd behavior for this point in the business cycle. Normally, the Fed would tighten to knock wages back in line, but they can't because of Asia and Russia and Brazil and...
Doug