> So if they have to destroy a significant fraction of their capital,
> their most rational reform would be to turn their investments in their
> neighbours into outright gifts and hope to regenerate current economic
> activity in Japan on the strength of increased economic activity in
> the region as a whole.
Who said anything about destruction? The point is East Asia has to start consuming what it produces. The US current account deficit can't go much higher without causing major havoc, and the Eurobourgies are not about to allow Japan to bulldoze the EU's industrial base.
East Asian workers need *a raise* -- either via feisty unions, more deficit spending, or a welfare state, take your pick.
-- Dennis