>There is effectively less and less money >in the Japanese economy. That's
why >they want to spur inflation.
No, they want to spur some inflation because deflation, as they now know it, makes capitalism impossible. They always had low inflation targets anyway, hitting those now might be a major victory.
> The problem is that they
>can't seem to get the Japanese >bourgeoisie to spend.
Yeah, how do you like that. Even decrees to go out and spend didn't make them buy more than they were already.
With deflation, you can buy far more with far less. If you are conscious of it, you might even wait on making a purchase knowing that the prices will come down further. This in fact seems to be happening. Everyone waits for sales to buy anything. With the increased competition in retailing, so far chain stores are obliging but not making much money. This, too, would add to deflation.
> I don't understand why
>the Japanese can't use this new, super->cheap money to refinance their
debts
>and finance new industry. Imagine what >American capitalists would do with
>money borrowed at 1 or 2 percent
Well, with no profits and with -1 percent inflation, I suppose they would start by hiring the CFO of Enron and Andersen as their accountants.
> I think we have to consider whether >interest rates in Japan are actually
>much too low.
Most Japanese savers think so. Right now the interest on savings, since it is so low, is really like a tax on everyone to help out the banks. One financial liberalization school theory was that this, this would finally force them to take their money out of postal savings and place it with Merrill Lynch. Didn't work.
> It may be that the only lender willing to >lend at such low
>risk premia is the Bank Of Japan.
Umm,isn't the BofJ supposed to be the lender of last resort?
Real rates aren't the lowest they've ever been, I think. I'll have to check that.
The range between what banks have to pay in the US to get your money and the rate they charge to lend it back to you is looking pretty narrow as well, you know.
Anyway, why borrow if you think the rates are going to be slashed even more? Even now, with rates as low as they can go, why not borrow when you see some inflation kick in (since that is supposed to be the official goal of the MofF and the BoJ, reflate).
> That's okay with me as a Marxist,
>provided the Bank Of Japan has enough >money to lend and can get it to
>productive areas of the economy, but I >don't think the BOJ is in that
>position. I think they're in the position of >lending money at the lowest
>possible risk premium to banks whose >actual creditworthiness is just
barely
>investment-grade.
So say all the analysts at Credit Suisse First Boston. Now those guys would know investment grade when they see it , wouldn't they?
> If so, it seems to me that is a dangerous >game. If so the BOJ would
simply be >betting against a massive default.
> Maybe Japan Inc.
>is too large to default. Maybe it isn't.
Oh, wow, it's sounds so ominous it makes my head spin. What's ridiculous is the idea of US vulture funds coming in and 'recapitalizing' Japanese banks. Basically they'd be using Japanese savings to buy up what's left of Japan, Inc. Unrealistic?That's what O'Neill and Bush want. Gee, I wonder why?
Finally, some of the gold boom in Japan just might be people speculating on it. When times get scary, people do this.There are all sorts of ads for buying gold because the worldwide financial apocalypse is near.
Considering your state of mind, Rad Bailey, can I interest you in some gold? Even if you can't sell, it makes great fillings. I think it's a better investment than Japanese gov't bonds.
Charles Jannuzi