>INTERVIEW: STANLEY FISCHER
>An Economic Insider's View
>Few people are ever privy to how world leaders >try to cope with their
economic woes. But from his >position at the IMF, Stanley Fischer
>certainly was INTERNATIONAL MONETARY >FUND former deputy chief Stanley
Fischer's
>first day as vice-chairman of Citibank in New York >earlier this month was
spent sorting out his >computer connections and finding his
>bearings in the nation's financial capital, where he >has been a presence
but never a resident.
No surprise there. It's nice to see even elites have to suffer with fucked up American computer OSes.
I love the American approach to revolving doors. From politics to business right back to politics and on and on. In this case, from academia to 'public service' into the cesspool of vulture capital from which his thinking came in the first place.
>WHAT ARE YOUR THOUGHTS ON JAPAN?
>We should be worried about Japan. Part of the >1997 crisis was related to
Japan. In particular, >Japanese banks were bringing money back. That
>was related to balance-sheet problems in Japan.
No mention of Soros and the currency speculators, huh?
>If the Japanese economy continues to decline, >that's a very negative
influence on
>global growth.
So is the US going back into deficits and soaking up ever more capital to finance its empire.
>Now if the banking system gets significantly weaker
>it's much less important in Southeast Asia than it >used to be, but it's
still a major factor.
Yes, mission accomplished there. Clinton, Rubin, and Stanley, what a team. All systems are go for the Anglo-American banking giants.
>So you'd have the transmission through
>weakening of demand in Japan, and you'd have >transmission through the weak
financial system.
The problems are not led by weakening of demand, just as they aren't led by bad loans. This is self-serving rhetorical treatment of the symptons and not the cause. The only thing that correlates perfectly with Japan's woes is THE STRONG YEN and he makes no mention of that. I wonder why?
>WHAT SHOULD BE DONE?
>My guess is that there are very high-quality people >and they know what's
going on.
Yeah, like bank loan officers who might well be the best people at evaluating a bank's loan portfolio.
>Probably, as was true in the IMF, there are strong
>internal arguments but you present a united face to >the outside. I would
bet that the bureaucrats are >pretty well informed. The question
>is what will move the political system. The IMF has >had a series of
disputes with the Japanese >authorities over the extent of
>nonperforming loans.
Yes, and the Japanese authorities and all of Japan lost.
>There is an official estimate, but when year
>after year the unofficial estimates turn out to be >more accurate than the
official estimates, that loses >credibility.
He says nothing at all specific to back this up, nothing at all. But why are the unofficial estimates of analysts hired by vulture funds and investment banks so credible here (but it's only these analysts who get press in FT, FEER, BW, Economist, etc.)
>And of course, the quality of the loans is dependent >on what happens to
the economy. So
>what may have been true at one moment when they >expected 2%-3% growth
>the following year is not true after another year of >recession.
Yeah, cases in point, Enron and Global Crossing and all their debt, right?
>WHAT'S THE SINGLE MOST IMPORTANT >MEASURE THAT COULD BE TAKEN?
>First, an accounting of the current situation that is >more credible.
Yes, I've heard there are a lot of accountants and analysts looking for work now that Enron is bankrupt.
>There is a remote possibility that the official >estimates are correct and
the analysts' estimates are >wrong, and if that is the case it would be nice
to >find a way of establishing it. But I don't think
>that's the situation.
Of course Stanley, you would say that , wouldn't you. I mean you say that because you REALLY DO CARE about Japan's banks and the loans that are tied to thousands of companies, don't you?
>And then once that is done, a programme,
>whatever it is, [is needed] that is more determined. >In some cases that
will involve bankruptcies. I think >the image of bankruptcies is wrong in
Asia. Here in >the United States people think of bankruptcy as
>a way to get on with business, mostly.
Yeah, post Enron, post Global Crossing, let's fuckin' roll man!
>The distinction between bankruptcy and liquidation >is well understood. In
Japan, their view is
>that if you need a procedure, or that somebody >must go bankrupt, that
you're advocating a close->down of Japan, which I doubt would be the
>outcome.
No, you want to buy up all the bargain assets for your interests and sell the other stuff 'securitized' right back to the banks and insurance companies you robbed (if you don't own them out right after the assets have been stripped). Which is why others need to fight you tooth and nail over the valuation of those loans.
>My sense is that if the yen moves much beyond
>135-140 to the U.S. dollar, the other countries will >react quite
vociferously.
That's because they bet their whole economies on the US never allowing the yen to weaken for very long against the dollar. Still, this pretty much confirms my hunch about what the ceiling for the dollar against the yen is. I think it's going to take a yen closer to PPP to reflate the economy, though.
Charles Jannuzi