> will pay. Do *you* want to be a holder of Japanese bonds? Do you think
> Japanese interest rates are going to go down? Is that even possible?
I would have no problem holding onto Japanese bonds. Returns are low, but currency fluctuations against the dollar make yen-denominated assets a no-brainer. Low rates are a problem only for those who speculate on interest fluctuations.
> (and have the power to). Our banks and other financial institutions are
> vastly more sophisticated when it comes to lending money and spreading
> risk. While Japanese savers are hording cash under their pillows, American
> bankers are figuring out how to syndicate, securitize and swap every credit
> relationship that exists.
This would be news to Deutsche Grenfell, Credit Suisse, UBS, and SG Paribas. The EU banking system is the mightiest and best-managed on the planet; Japan ranks second, the USA a distant third. Our credit system is tied to the fortunes of a fickle stock market; theirs is tied to global production networks. They're generating such vast surpluses, they don't know what to do with all the money -- so they've been investing it here, for the time being.
I'm glad to hear that the real economy has been replaced by currency flows. Starving peasants in Thailand, the rural landless in Brazil, and unpaid workers in Russia will sleep soundly tonight, knowing the gnawing in their bellies is totally fictitious.
-- Dennis