Re: The $ thing

[Dennis R Redmond <dredmond@xxxxxxxxxxxxxxxxxx>]

On Mon, 7 Dec 1998, Greg Nowell wrote:

> funds.  Are we to conclude that the only way to avoid
> crisis is to run a permanent trade surplus?

We're talking about two different things: dollars flowing into foreign
markets is one thing. But that's just a medium of exchange. I'm talking
*credit flows*, which is something else entirely. Trade deficits aren't
the end of the world, and can certainly be balanced out by internal credit
expansion. But enormous trade deficits and equally enormous current
account deficits are, in the world of late capitalism, not a Good Thing:
they mean that someone, somewhere, is lending you money and you're not
buying your own goods, you're buying someone else's goods.

> How do we account for the fact that Japan is so screwed up?

How can they be so screwed up if they're running humongous trade surpluses
with that mighty US economy and are global creditors to the tune of $1
trillion? Japanese firms got whacked by the Asian crisis, sure, but
they'll bail themselves out, restructure, and be back a couple of years
from now. Their keiretsu structure have done this before (the 1975 crisis,
which almost sank Mitsubishi; the endaka period in the late Eighties, when
the yen zoomed against the dollar; and the crash of the bubble economy in
1990-94), and they'll do it again.

-- Dennis