How is issuing stock options financial engineering? Not to say Wall St. is a bunch of saints or anything, but Japanese "zaitech" was a thing unto itself: promises from big financial houses for "guaranteed returns," balance sheets showing the value of shares at the higher of the market price or the buy price, issuing new stock to cross-shareholders only. Of course, lowering Japanese rates to prop up Wall St. after the 87 crash didn't hurt either.
>
> > Japan's politicians fear the chaos that enveloped Eastern Europe and
Russia
> > after they embraced free markets. Unlike those countries, Japan has a
high
> > standard of living, but that's largely because the government has
prevented
> > the bankruptcy of many insolvent companies.
>
> No, it's because Japan is a *metropole* with a kickass industrial base,
> which produces 50% of the world's robots.
>
You have to laugh when anybody says that the amazing history of Japanese development (ie high standard of living) is due solely to an overweening gov't.
> Then nationalize 'em. Japan's postal savings bank, publicly owned, remains
> the soundest bank in Japan.
With absolutely no returns for savers. That's why Samurai bonds from foreign borrowers are becoming more popular.
>
> Doesn't matter, as long as interest rates are low and you finance your own
> economy. It could go to 200%, 300% -- private debt in the US is now well
> over 200% of GDP or something like that, but we don't hear calls for
> liquidating Salle Mae and Visa, do we?
True about US debt, but in order to avoid a deflationary spiral, somehow the Japanese are going to have to manufacture a modest bit of inflation. When they do so, interest rates are going to have to go up. High enough to cause a problem? That's another question.
> One last point: Japan's deficit
> figures don't include Government assets, i.e. precious state-owned land
> near railroads, etc.
I think the debt figures also count the postal savings system, which is no more debt than your deposits in your local checking account, really. Likewise for the pension liabilities, which are also often counted in the debt (tho I'm not sure.)
Christian