Henry C.K. Liu
Stephen E Philion wrote:
> Praytell, could they benefit from a discussion with Doug henwood? Or Paul
> Sweezy? And which Japanese? Japanese trade unionists and businessmen
> would have the same problems communicating with a Sweezy or a Henowood?
> Liberals are always speaking in such generalities....
>
> Steve
>
> On Tue, 4 May 1999, Henry C.K. Liu wrote:
>
> > Americans are not capable of understand or advising Japan, becasue they think
> > its logical for the Japanese to help restore the collapsing American economic
> > empire.
> > The Japanese have a very different agenda which they never openly discuss with
> > Americans because they do not like confrontations culturally and certainly not
> > before the time is ripe.
> > Japan sees the current financial/economic crisis, which for Japan has been
> > building for more than a decade, as the gradual collapse of the post-war
> > American world order and an opportunity for Japan to become an independent power
> > again. Japan is prepared to suffer and can afford to suffer the pain in order
> > to srike a better deal for itself in the coming new world order.
> > They see all the advice and prescriptions coming their way from America as
> > self-serving strategies that help America more than they help Japan. And
> > Japanese officials will pay lip service to these advice and prescriptions and
> > pretend they are trying their best to follow them. The few Japanese initiatives
> > that Japan did propose had been categorically shot down by American officials
> > (one in the WB/IMF meeting in Hong Kong in October, 1997, and the latest one in
> > the G7 meeting in Bonn a few months ago.)
> > The Japanese government has a strategy of absorbing from the general public the
> > pain caused by the economic stagnation. For Japan, it can go on like this for
> > another decade, if the starting point after the collapse will put Japan on a
> > more even footing. They are living on their debt interest income from America.
> > Americans think quarterly, Japan thinks in 50 year cycles. That is why
> > Greenspan/Rubin don't trust them and resist Japanese leadership in Asian
> > affairs.
> > The US is opposed to Japanese leadership in ASEAN. Rubin turned down a US$100
> > billion rescue package for Asia in October 1997 during the World Bank/IMF
> > meeting in Hong Kong.
> > He also turned down a Japnese/EU proposal to stabilized the 3 currencies during
> > the G7 meeting in Bonn in January, 1999.
> >
> > Summers, whose credibility has been irrevocably tarnished internationally by his
> > inept handling of the global financial crisis in the past two years, gave
> > another admonishing speech in Japan on February 26, 1999, warning Japan not to
> > depend on a weak yen to boost its economy, using worn-out slogans such as:
> > "the exchange rate cannot be a substitute for policy."
> >
> > Its an amazing posture after Rubin/Summers turned down a Japanese/EU joint
> > proposal for a 3 currency stabilization regime at the G7 meeting in Bonn. Being
> > a bit humbled by his own dismal record of first diagnosing the Asian crisis as
> > merely transient, then IMF off-the-shelve conditionalities as the only cure, and
> > finally non-intervention of free financial markets as a inviolable guiding
> > principle, Summers declared vaguely this time the Krugman cure:
> > "What I think is crucial is the recognition that the goal of price stabily
> > include the responsibility to avoid deflation."
> > He and Rubins declared only a month earlier that while free markets are not
> > perfect, all other forms intervention alternatives are worse. He then went to
> > Japan and again asked the Japanese to intervene in their economy with
> > interventionist monetary policies.
> > Yukihiko Ikeda, a senior member of the ruling Liberal Democratic Party, reported
> > told the press: "Mr. Summers says, do this, do that. But we will continue with
> > steps already in the works."
> > Japanese officials are generally of the opinion that reflationary policies would
> > further weaken the yen, due to pressure on the value of the yen from any
> > increased supply. It may lead to further currency devaluations in other parts
> > of Asia.
> > The BOJ, Japan's central bank, thinks Krugman/Summers are offering snake oil
> > cures in the notion of fighting deflation with easing money supply.
> > Meanwhile, the prime minister of Malaysia is publicly urging Japan to dump its
> > US Treasry holding to show Asia's displeasure on US nationalistic globaliztion
> > policies.
> >
> > With Rubin/Greenspan successfully resisting stabilized global exchange rates,
> > the effect of foreign governments printing money will not create inflation in
> > the US. It only means the Thai baht and the Brazilian real will fall in value
> > against the dollar.
> > Hyperinflation will not help Japan. Krugman is wrong. Because both the debtors
> > and creditors in Japan are Japanese and they both use yens. There will be no
> > indirect debt forgiveness through inflation, only currency devaluation replacing
> > asset deflation, At the end of the day, Japanese assets will end up being worth
> > less. Deflation increases Japanese trade competitiveness without devaluing the
> > yen. Reflation will not solve any problem for Japan. It only pushes the policy
> > ballon from a direction that currently catches the fancy of Krugman/Smmers.
> >
> > American globalization created bubbles all over the world that burst in 1997.
> > The EU is on the way down. The American domestic bubble continues to expand
> > from the "salutary" effect (Greenspan) of the global crises that started in
> > Asia. Japan is waiting for the American bubble to burst from which to build a
> > more equal footing for Japan in the new economic order. In the mean time, Japan
> > has a good excuse not to buy from America while building up a handsome trade
> > surplus. Rubin is right about one thing: America cannot be the sole engine for
> > the whole world economy. It will have to overheat and blow a piston sooner or
> > later. The Japanese know that all bubble burts, some only later.
> >
> > Henry C.K. Liu
> >
> >
> >
> >
> >
> > James Baird wrote:
> >
> > > >
> > > > Dennis is correct. The Japanese are playing a different game to
> > > reposition
> > > > themselves for the long haul while playing dumb with American advice.
> > > None of
> > > > the countries that followed American/IMF prescriptons are doing that well.
> > > >
> > > > Henry C.K. Liu
> > >
> > > But is that what Krugman is recommending? He's spent the last six months
> > > saying that Japan needs a decent dose of inflation as a kick start - not
> > > exactly IMF orthodoxy.
> > >
> > > Jim Baird
> >
> >