19-05-2003 23:53									#61
	Got spare money?

quote: Originally posted by DanS Also, Japan just nationalized its #4 bank, Resona. http://news.ft.com/servlet/ContentS...p=1012571727313

Stephen Roach has a good comment about this.

I'm still sanguine Japan will return to its old self. They have a skilled labout force and abundant capital, it's just a matter of utilising these properly.

quote: Re GE, yeh it's sort of a weak comparison, but it's the best I could do! American companies know better than to get into money-losing businesses!

Like the internet? (sorry, just couldn't resist!)

	20-05-2003 00:31									#62
	Support Apolyton, pre-order Civilization IV

quote: Originally posted by Tingkai Here's a radical thought. The Japanese economy is fine. Sures there's no GDP growth, but unemployment is only 5.5%. It's not like the problems the US economy went through in the 30s and 70s. I was in Tokyo in Japan last week. Things look better there compared to a lot of Western economies that I;ve seen recently. Maybe we put too much emphasis on economic growth. I mean who is doing better? The US with its great GDP growth in the 90s, but stagnant wages for the majority and extensive poverty levels or the Japanese who don't have any slums and have a high level of education?

Well its all relative isn't it? Before the USSR imploded they didn't got any poorer either, they just stagnated while the West rushed ahead.
I doubt many Japanese are happy with the fact they've seen their status degrade from economic miracle to the world's sick man.

And the actual employment situation is much worse, is just doesn't show up like that because of underemployment and unemployed who have been written out and don't get unemployment benefits. (those aren't very generous in Japan)

I think the slow-motion pace of the crisis is deceiving. The situation deteriorated only such gradually it may not occur that Japan is in a deep mess. (take Japan's national debt for instance, it's at 130-140% of GDP, and there's no way they can decrease that if growth doesn't revive - in that case: how the hell are they going to fund the pensions of a rapidly greying country over 20 years?)

	20-05-2003 06:06									#63
	Lose 30 kilos (of popups)

For those of you thinking deflation isn't so bad please allow me to disabuse you of that notion. Here is an article from this week's Businessweek which discusses the effects 12 years of deflation have had on the Japanese economy and the Japanese standard of living. Trust me we don't want to follow in their foot steps.

	20-05-2003 06:29									#64
	Inflate your Upload Space

Of course in the 1980's Japan was a highly regulated market with some of the highest prices on Earth. As the economy has stagnated and the government has been forced to let in, even a modest amount, of foreign competetion the prices could only go down. Germany and China don't have the problem of starting their possible deflationary period with the highest prices on the planet so if they do get hit with deflation it will be very mild.

	20-05-2003 14:56									#65
	Support Apolyton or Terrorists Win

Could someone answere a question I´ve always had about deflation: Why is it so hard to get out of? It seems that all you have to do is print money and spend it. This starts up the economy, gets people spending, and makes jobs. By inflating your currency, you can also shrink your debt obligations and weaken your currency, thus promoting exports. What am I missing? I know inflation is bad, but it seems that deflation is worse, so why don´t they just start printing money?

	20-05-2003 15:00									#66
	Remove this text

I maybe wrong but I think they have tried this and it just hasn't worked

	20-05-2003 15:05									#67
	Support Apolyton, buy GURPS/ Alpha Centauri

How do you say "viva la revolution" in Japanese?

	20-05-2003 15:07									#68
	Suffering from ads?

quote: Originally posted by Sava How do you say "viva la revolution" in Japanese?

by a freak co-incidence it is Viva la revolution

	20-05-2003 16:42									#70
	Enter the AD-FREE zone

quote: Originally posted by Oerdin For those of you thinking deflation isn't so bad please allow me to disabuse you of that notion. Here is an article from this week's Businessweek which discusses the effects 12 years of deflation have had on the Japanese economy and the Japanese standard of living. Trust me we don't want to follow in their foot steps.

That article seemed to show that deflation was not a terrible thing. People are still spending money, just differently. It quotes one person who says she takes a couple of vacations a year. Salaries have stagnated, but prices have dropped so purchasing power is up.

Property owners have lost money. The hostess bars have lost business (meaning there's fewer stupid men willing to pay hundreds of dollars just to have a woman sit beside them while they drink).

Sure, Sogo in Ginza closed, but there are still a dozen big department stores there.

Unemployment is up, but still below US official levels.

And what has inflation done for North Americans? It's just a smokescreen to make people think they're earning more money now than 10 years ago when in fact for most people, their real income is up about $100 a year.

Of course, people don't understand inflation. They think, well I was earning $35,000 10 years ago and now I earn $45,000 so I'm ahead. When in fact that $45,000 just buys the same thing $35,000 did 10 years ago. (Numbers are just examples and not reflective of actual inflation and wages).

	20-05-2003 20:53									#71
	Get a bigger avatar today!

Colon: By my reckoning, Roach is cheerleading. It's not that he doesn't have some small basis for it--the nationalization is a good thing, as it injects some reality into the system. And you are right to point out Japan's strengths, which are substantial.

But even by his own admission, Japan is "[p]lagued by excess capacity of capital and labor and underpinned by a failed financial system" and that "Japan now finds itself caught in the worst of all possible macro dilemmas — a deflationary liquidity trap."

	20-05-2003 21:44									#72
	Increase the size of your Attachments

quote: Originally posted by DanS Colon: By my reckoning, Roach is cheerleading. It's not that he doesn't have some small basis for it--the nationalization is a good thing, as it injects some reality into the system. And you are right to point out Japan's strengths, which are substantial. But even by his own admission, Japan is "[p]lagued by excess capacity of capital and labor and underpinned by a failed financial system" and that "Japan now finds itself caught in the worst of all possible macro dilemmas — a deflationary liquidity trap."

Yes, he says that, and he says the nationalisation gives reason for hope there will be fundamental reform in the financial system. How is that cheerleading?

And that quote doesn't contradict my optimism in the long run. As I said, it's just a matter of utilising Japan's resources properly (by resolving the problems in the financial sector - and if they won't reform voluntarily, I'm sure an implosion of the financial system will force them to)

	21-05-2003 05:54									#73
	Increase the size of your Attachments

About India again, Microsoft is investing $400mn in a supports centre for high end products.

	21-05-2003 06:01									#74
	Support Apolyton, buy Galactic Civilizations

quote: Originally posted by Richard Bruns Could someone answere a question I´ve always had about deflation: Why is it so hard to get out of? It seems that all you have to do is print money and spend it. This starts up the economy, gets people spending, and makes jobs. By inflating your currency, you can also shrink your debt obligations and weaken your currency, thus promoting exports. What am I missing? I know inflation is bad, but it seems that deflation is worse, so why don´t they just start printing money?

That would work as long as a country's debt wasn't in a foreign currency. Thus very few countries could actually do it successfully. Do you remember the east Asian debt crisis of 1997 or the Latin American Debt crisis of 1998? In both cases countries defalted on debt causing the local currency to crash and crushing the economy. Like you said this can have some positive effects in fighting deflation. So what was the big problem? Most of the major international debts had to be paid back in dollars, D-marks, Pounds, or Yen. That meant deflating the currency caused national debts to explode many times over and bankrupted several nations.

	21-05-2003 07:48									#75
	Suffering from ads?

quote: Originally posted by Tingkai I mean who is doing better? The US with its great GDP growth in the 90s, but stagnant wages for the majority and extensive poverty levels or the Japanese who don't have any slums and have a high level of education?

The Japanese have slums. They just don't like to advertise that fact or even admit it to themselves, just like they like to pretend there's no homeless, or a plethora of other socioeconomic ills don't exist.

	21-05-2003 22:20									#76
	Increase Your PM Length

Yes, he says that, and he says the nationalisation gives reason for hope there will be fundamental reform in the financial system. How is that cheerleading?o

I guess it seems like he's cheering at a funeral.

And that quote doesn't contradict my optimism in the long run.

At this pace, you're talking about the very long run.

	21-05-2003 23:22									#77
	Got spare money?

quote: Originally posted by DanS I guess it seems like he's cheering at a funeral.

You're seeing things I'm not seeing. Any examples?

quote: At this pace, you're talking about the very long run.

Depends on how quickly they clean up the mess in the financial system. The deflation rate alone suggests the output gap is pretty large and I think their economy could rebound amazingly fast once they get capital flowing to the right places.

	21-05-2003 23:31									#78
	Increase Your PM Length

Oerdin, most of Japan's national debt is held by Japanese.

	22-05-2003 01:56									#79
	Support Apolyton, buy Civilization 2

quote: Originally posted by Tingkai That article seemed to show that deflation was not a terrible thing. People are still spending money, just differently. It quotes one person who says she takes a couple of vacations a year. Salaries have stagnated, but prices have dropped so purchasing power is up.

It's easy to say that deflation is good because prices are falling. Falling prices are not bad in itself exept when they lead to increased savings. That is, falling prices will be good for the economy as long as nominal wages fall and consumers spend their extra savings on other goods and services instead of speculating on increased value in the currency. Deflation hasn't been too bad in Japan yet, partly because nominal wages have fallen. However, continued deflation will definitely have dramatic consequences. I don't see how nominal wages can continue to fall to efficient levels, even in Japan.

	23-05-2003 21:58									#80
	Enter the AD-FREE zone

Dan, does sales tax only apply to goods and not to services?

	23-05-2003 22:09									#81
	Browse Apolyton AD-FREE

Yes, sales tax applies only to goods in the US. But if you import something, then no sales tax applies (or rather, it applies to the seller, but is not collected, just as happens with out-of-state goods). Services are not taxed, except perhaps in special cases. There is a running battle between city hall and lawyers in DC for a service tax of 1-3%, for instance. But DC is a little screwed up because it doesn't share in any income taxes from the suburbs and tries to institute all sorts of commuter taxes (unsuccessfully).

Last edited by DanS on 23-05-2003 at 22:16

	23-05-2003 22:23									#82
	Get a bigger avatar today!

quote: Originally posted by Colon Oerdin, most of Japan's national debt is held by Japanese.

My example was based up Latin America and east Asia minus Japan. Everything which I've read points to Japan's deflationary spiral having to do with a highly regulated enviroment which prevents the rationization of excess capacity, banks which would be considered bankrupt in most countries (alot of it is due to the deflation of realestate but some of it is due to the government channeling low interest loans to targeted industries during the boom years), and fact that prices were run up sky high during the bubble so they have no where to go but down now.

The example in my previous post was to anwser the question of why most countries don't deal with deflation and a debt crisis simply buy printing money.

	23-05-2003 22:28									#83
	Tired of ads?

Oerdin,

The problem in the Asian Financial Crisis was high interest rates. A lower interest rate would have prevented the bubble. For example, in Thialand the bubble burst, and then they added liquidity to the system. They had no other choice but to do so, and they should have done it sooner.

	23-05-2003 22:30									#84
	Help yourself to an AD-FREE life

quote: Originally posted by Kidicious Oerdin, The problem in the Asian Financial Crisis was high interest rates. A lower interest rate would have prevented the bubble. For example, in Thialand the bubble burst, and then they added liquidity to the system. They had no other choice but to do so, and they should have done it sooner.

The problem was debt and the inability to repay it on time. Lowering the interest rates would have reved up the economy but also would have increased inflation.

	23-05-2003 22:32									#85
	Suffering from ads?

Dan, that's interesting. I wonder how much this distorts normal purchase patterns and whether there would be proportionally less purchases of services if both would be taxed equally across the US.

	23-05-2003 22:34									#86
	Get a bigger avatar today!

Well, to be fair, sales tax is not that high in most states. Some states don't even have it. In DC it is 5.75%. In Maryland, it is 5%. In Virginia, it is 4.5%. Most people buy a lot of stuff on the internet nowadays, anyway. No sales tax there most of the time.

	23-05-2003 22:35									#87
	Support Apolyton, pre-order Civilization IV

quote: Originally posted by Oerdin The problem was debt and the inability to repay it on time. Lowering the interest rates would have reved up the economy but also would have increased inflation.

It works differently in some countries. High interest rates tend to bring in too much foreign investment. The level keeps increasing until investors recognize the bubble and then they pull out and then all the central bank can do is try to flood the banks with liquidity.

	23-05-2003 22:38									#88
	Remove this text

Hmm, I hadn't thought of that. At what point does the high interest rates cause more harm to the domestic economy then benifit from foreign capital?

	23-05-2003 22:40									#89
	Support Apolyton, buy Call to Power 2

quote: Originally posted by Oerdin Hmm, I hadn't thought of that. At what point does the high interest rates cause more harm to the domestic economy then benifit from foreign capital?

It depends on each situation.

	23-05-2003 22:43									#90
	Support Apolyton, buy Galactic Civilizations: Deluxe Edition

I would think that in nearly all cases the total amount of domestic production would far out weight the amount of incoming foreign capital. Thus you'd want to keep interest rates moderate so as to not kill the real economic engine of the country during your prosuit of foreign funds.