Re: Whither Japanese Debt?

["John Gelles" <johng@xxxxxxxxxx>]

[Please forgive any double posting, I hit some wrong keys]


        If Keynesian thought means anything, it means that
        Japanese debt is easily erased -- with no real loss
        to anyone -- not already suffered in fact.  Moreover,
        such paper losses, once cleared as I recommend
        below, will be followed by resumption of major
        gains by Japanese workers now under stress for lack
        of appropriate action by their national government.

        Imperialism does not enter the picture. Henry does
        not claim to be an economist.  Hundreds on this forum
        do. If my recommendations are bullshit, some of
        you owe all of us at least that opinion.  If you have
        time to add reasons to the opinion -- so much the
        better.

        Naturally the charge of dollar imperialism and
        dollar hegemony hurts.  I see the USA as a
        mistaken political economy in the way we treat
        our own workers.

        I am with all the economists here in trying
        to get Congress to see solutions similar to
        those that financed WW II as appropriate to a
        nation at peace. (Although few of you put
        in those words.)

        But interpeting our foolishness -- when we
        beat down our own labor movement -- as
        foreign imperialism goes further than the truth.

        The US Congress and administrations from 1945
        onward, and especially from the Korean War
        onward, helped make Japan, a relatively small
        island of hard working educated people, the
        second greatest economy in the world.

        When Japan, the imperial power in Korea for
        forty years, called the tune, it abused the Korean
        people. That's imperialism.

        Henry's Chomskyian views does not come to
        grips with Keynesian solutions. OK. He's on
        another wavelength.

        What about the rest of  you. Forget for a moment
        "imperialism". What should be done in Japan to
        renew the economic security its working people
        once had in enviable measure?

        Are not Japanese postal savings in fact a
        little like Gelles' Individual Estate Accounts --
        a means to create private wealth in government's
        hands? As I understand it,  the only problem with
        their postal savings is that the ruling liberal party
        invests the funds to suit its political agenda. That,
        of course, ought to be corrected.  My IEA's
        might also be subject to political abuse. But
        their purpose is to discourage private spending
        and facilitate public spending on national,
        societal and global priorities.

            John Gelles

===== Referenced Message ========
From: Henry C.K. Liu <hliu@xxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Friday, April 27, 2001 9:23 AM
Subject: Re: Whither Japanese Debt?


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, in message today to Pkt, wrote:

        " If Keynesian principles mean anything, they mean
         Japan can monetize its debt and live happily until
         they chose to do it -- over and over again.

         "The story that seems to be prevalent here is that
         Japanese firms, banks 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 restructured:  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 asset bubbles burst. What shoud it do
         at macro level to get back to full employment,
         lifetime economic security, etc., and even on
         to 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 pursue profit from its 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 them 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 builds 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