[PEN-L:146] Re: Re: Why Do Markets Crash?

[boddhisatva <kbevans@xxxxxxxxx>]

		C. Coyle,


	Japan's situation is more like that of the US in the 20's.  They
are the ones refusing to raise interest rates despite a highly artificial
price structure and diminishing productivity.  The BOJ is artificially
stimulating a bias for capital to move to America, as America was
stimulating a bias for capital not to leave London = same direction,
outward.   The impetus may be diferent but the effect is very similar.



	I think Japan will have another crunch if not an outright crash.
Their market, however is so depressed that it's volatility is to the
upside.  What do you think will happen when even modest percentages of
Japanese savings come out of the postal system and head off shore?
Compare the numbers to even their foreign exchange reserves.  There are so
many potential yen to come to market that it is not inconceivable that one
might see the yen at 200 to the dollar again.  And, as an added bonus, for
your yen you get all of one and a half percent interest.  Who is going to
buy all that debt the bridge bank is supposedly going to securitize (or
cause to be securitizeed as they raise capitalization standards for
banks)?  At two percent?  three?  four?


	It seems to me that when low interest rates no longer stimulate an
economy - whether in stagflation or the liquidity trap - capitalism has
become undisciplined and requires punishing interest rates - or a
revolution, we can play it that way too.




	peace