Re: Whither Japanese Debt?

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Yen is yen; dollar is dollar, and the two shall never meet.
The Japanese are rich in dollars and debt-ridden in yen. It is the curse
of an export economy which does not concurrently enjoy the geopolitical
advantage of imperialism.

Henry C.K. Liu

John Gelles wrote:

>         If Keynesian principles mean anything, they mean
>         Japan can monetize its debt and live happily until
>         they have to do it over and over again.
>
>         The story that seems to be prevalent here is that
>         Japanese firms, bank and government are awash
>         in debt. The story says some of the private debt,
>         borrowed againts real estate and stock that is
>         valued today below the debt for which it was
>         collateral, needs to be resturctured:  exchanged
>         for equity, written down, or transferred to
>         government to be monetized along with the
>         latter's other debt.
>
>         If the above clears out non-performing debt
>         from the private sector, and banks can then
>         resume financing profit oriented opportunity,
>         then some rational progress will be made to
>         return to competition with other market
>         players without undue pressure on that sector
>         to limit necessary borrowing.
>
>         Assume the above remedy returns Japan to
>         far less growth and prosperity than before its
>         capital assets bubbles burst. What shoud it do
>         at macro level to get back to full employment,
>         lifetime economic security, etc., and even
>         greater growth than ever?
>
>         It should applaud its saving habit -- not try to
>         change it.  It should print new money, not
>         borrow it, to bring down the yen and clear all
>         government debt from the books.
>
>         Then government should continue to spend on
>         public infrastructure, environmental, R&D, and
>         all other real needs that the private sector avoids
>         for lack of profit opportunity.
>
>         The more its people save, the more government
>         can spend on need, without causing hyperinflation.
>
>         The lower the yen the greater the opportunity for
>         the private sector to profit from exports.
>
>         In matters of real wealth, Japan can advance in
>         ocean mining and ocean agriculture. It can go
>         completely nuclear to end import of fossil fuel.
>         It can develop a 100% safe nuclear industry
>         based on smaller individual plants wholly immune
>         to earthquake -- if necessary floating in
>         protected bays and inlets.
>
>         To ask Japan to finance prosperity via consumer
>         spending is idiotic. The less private spending the
>         better. Public spending can ensure profits, full
>         employment and production of sensible end
>         products.
>
>         And as new debt build up again and capital
>         assets again inflate, the next time their bubbles
>         burst a cure will have already been found.
>
>         Meanwhile private postal saving can be indexed
>         for inflation in essential living expenses (food,
>         health, shelter, etc.) and lifelong economic
>         security can be experienced by one generation
>         after another.
>
>             John Gelles