Japan: Up or Down?

[Greg Nowell]

Basically you can socialize the bank loans as the article said or you can let the
banks do it.  If you socialize you pass the cost on to the public in the form of
interest payments on the debt.  If you don't socialize the banks use incoming
loan payments to build up reserves against bad debt and cut back their lendign,
which restricts economic activity, so the public pays through unemployment and
job insecurity.

Basically the old saying that what's good for GM is good for the country (read,
working class) applies even more to the financial sector.  Short of abolishing
capitalism you're stuck with bailing the suckers out.

The notion that Japanese "pump priming" is ephemeral might be, methinks, well
founded.  What is not needed is a temporary burst of spending which then let's
the economy crash again.  What would be better is a guarnateed social welfare
system (esp retirement) which allowed people to spend down their personal savings
in confidence that they would be maintained in old age.    Japan has even less of
a welfare system than the US.

-gn.

JayHecht at aol.com wrote:


> Has anyone been following the recent debate about Japan's latest GDP growth
> numbers.
>
> For example, the not-worth-the-$3 Abelson claims that the +7% rate indicates
> a new beginning for the Nikkei while (in the same issue)  Gene Epstein claims
> that the numbers are wrong - HH expenditures were barely up 1% and that the
> latest data reflect a bankrupt "pump priming" attempt by the gov't.
> Interestringly, Epstein cites another "Wallcon"  (my name for wall street
> economists) who suggests that the gov't should socialize the non-performing
> bank loans (by floating bonds).
>
> What's the deal?  Jordan? Greg? Henry? Doug?  Et. Tu?
>
> Jason

--
Gregory P. Nowell
Associate Professor
Department of Political Science, Milne 100
State University of New York
135 Western Ave.
Albany, New York 12222

Fax 518-442-5298