Fed cuts rates; crisis over?

[James Devine]

Dennis says: >... Japan's problem is not lack of capital: they're sitting
on a $3 trillion mountain of liquidity and are running vast trade surpluses
with the rest of the planet, but still act as if they were a poor,
semiperipheral country, i.e. refuse to consume Southeast Asian imports.
They can finance not only the current package, they could bail out the
entire Pacific Rim economy -- and they will, because they have *no other
choice* anymore. It's either a $1 trillion bailout boom or a global bust,
and the executives of Mitsubishi, Hitachi, Sony et. al. who really run
Japan Inc. are finally starting to realize this. <

Just because they have no other choice in Dennis' view doesn't mean they'll
actually do it. Several economic observers from the center, the left, and
the right have referred to the downright stupidity of Japanese
policy-makers in the past (which got them into their current mess), so
isn't it possible that they'll be downright stupid in the future?

Now, I don't believe that they really are stupid. But I would guess that
there's some sort of political gridlock going on that prevents the kind of
reflation that they need. Dennis, do you have any info on the internal
politics behind Japanese policy-making? Why the long delay (since the
popping of the bubble economy) before reflation? (an irrational aversion to
fiscal stimulus, perhaps?)

BTW, whatever happened to the Japanese idea of giving each citizen a pile
of money that only had value if it were spent immediately? was this totally
shelved and replaced by the bail-out of the banks?

Jim Devine jdevine at popmail.lmu.edu &
http://clawww.lmu.edu/Departments/ECON/jdevine.html