Ugh! (was Global Intelligence: Japan)
Jim D posits a good cop / bad cop Dem-GOP scam, but then continues:
Like even the best analogies, this one leaves something out, specifically
divisions _within_ the two parties.
No problem about that; where's your yin-yang sense? There's just enough
contradictory material within each side and its individuals to make
a really convincing "Mutt Jeff" (official cop parlance) possible.
Once in a while even Jesse Helms will exhale something half-plausible.
But those divisions can only be
exploited if we put constant and growing pressure on both parties from the
outside, i.e., extra-electoral action.
Right you are, Jim; I think I have an extra M-1 somewhere in the attic.
Even the GOPs improve when mass
discontent becomes overt: remember that it was Nixon who instituted both
OSHA (the occupational safety law) and the EPA (a dose of eco-sanity). He
did so partly to try to undermine the anti-war and other
anti-establishmentarian movements.
I suspect the insurance lobby and Ma Nature herself were behind those two,
whatever the chanters in Lafayette Park may have grandly imagined.
(Neither of these programs were as good
as they could have been, but that simply tells us that more pressure is
needed. BTW, the example of Nixon should remind us of how pitiful Clinton
is.) Rather than hoping that the "good czar" ("Free Willy" Clinton) will
shower us with gifts, we have to keep up the pressure.
Ah, tovarisch, you betray a subliminal understanding of our position in
history after all. Indeed, the cavalry is already collecting itself in
the side streets, having been made privy to the market's true condition.
valis
Re: Global Intelligence: Japan to fall?
C. Redmond, You wrote: "Money is merely the financial form of capital. There are plenty of other subforms of the larger abstraction (industrial, intellectual, social, cultural, etc.), each of which competes against its compadres for its share of the social surplus. The yen or dollar is merely the nominalistic sign of these larger social antagonisms." unfortunately for your argument all these other forms serve the interests of producing more money-capital for the owning class. Industrial, intellectual, social and cultural capitals can *try( to compete with money-profit-capital, but htey will certainly lose to some extent because of the structure of capitalist property relations. As if that's not bad enough, Keynesianism entrusts the ruling class to mediate the struggle of other capitals against profit. As if. peace
Re: Global Intelligence: Japan
At 01:23 PM 4/8/98 -0400, you wrote:
Barkley writes: ... Maybe it is just "faith," but I do think that we are
going through a Schumpeterian qualitative technological transformation, and
I see these as the key to long wave upswings. Do they generally lead to
their own demise, often through demand-side blowouts? Indeed, and 1929 is a
very good example. But this suggests that the downswing is probably a ways
off.
Yeah, while you were off gallivanting around Europe, I posted a message to
pen-l saying that according to the "history repeats itself" criterion
(which long-wave partisans cling to), a new 1929 won't happen until during
President Gore's first term (probably while he's in the hospital being
treated for a termite infestation). BTW, if my theory is right, the more
that the new collapse is delayed, the worse it is, as imbalances are
allowed to accumulate in the US and world economies.
But then, besides all my weirdo chaos/catastrophe stuff, I also buy into
Keynesian uncertainty. Anything can happen. We could have a Great
Depression tomorrow. Some on this list have told scenarios erupting out of
East Asia that could lead to it. I don't rule it out, but I wouldn't "bet
the farm" on it either.
Luckily or unluckily, I don't have much of a farm to bet. But instead of
arguing that "anything can happen," it's better to deal with competing
scenarios. "Anything can happen" hardly helps us decide what to do.
BTW, on the never-ending leftist debate about the Dems. vs. the GOPs, it
seems that the best analogy comes from cop shows, where the "good cop" (the
Dems.) and the "bad cop" (the GOPs) mess with the mind of the prisoner (US
voters). They differ, but are unified in a goal, getting the prisoner to
confess (accept the status quo).
Like even the best analogies, this one leaves something out, specifically
divisions _within_ the two parties. But those divisions can only be
exploited if we put constant and growing pressure on both parties from the
outside, i.e., extra-electoral action. Even the GOPs improve when mass
discontent becomes overt: remember that it was Nixon who instituted both
OSHA (the occupational safety law) and the EPA (a dose of eco-sanity). He
did so partly to try to undermine the anti-war and other
anti-establishmentarian movements. (Neither of these programs were as good
as they could have been, but that simply tells us that more pressure is
needed. BTW, the example of Nixon should remind us of how pitiful Clinton
is.) Rather than hoping that the "good czar" ("Free Willy" Clinton) will
shower us with gifts, we have to keep up the pressure.
in pen-l solidarity,
Jim Devine [EMAIL PROTECTED]
http://clawww.lmu.edu/1997F/ECON/jdevine.html
"It takes a busload of faith to get by." -- Lou Reed.
Re: Global Intelligence: Japan to fall?
C. Dennis, Don't you recall Yamaichi's Chairman tearfully revealing that his firm had hidden 2 *billion* dollars in losses from its lenders for years? I believe that was accompanied with the brokerage's *failing*. What do you know about Japanese accounting that the rest of the world doesn't? The Nikkei *might* be a buy if it was denominated in another currency, but it isn't. As I write this Japan is intervening to prop up the Yen. They will do it again, and again. Meanwhile gold has had a very suspicious run-up that has been credited to investment buyers. I wonder whether Japanese investors might not be looking for a little stability. peace
Re: Global Intelligence: Japan to fall?
To whom, Let me clarify. If Japan gets it's house in order (as Korea seems to be doing if recent reception for its debt is any indication), her possibilities are probably only limited by the fact that not that many people speak Japanese as opposed to English world-wide. By that I mean that the *limits* for a fiscally sound Japan are probably not reachable. The problems are that overvalued and financially unsound companies will have to go AND pricing structures will have to change AND interest rates will go up AND reserves will go down. The Yen will probably take an extraordinary hit in value as the temporary re-structuring downturn is accompanied by, and encourages, the flight of Yen into world credit markets (BTW I tend to put both equity and debt markets into the idea of "credit markets"). That will take a while to sort out, to say the least. peace
Re: Global Intelligence: Japan to fall?
On Thu, 9 Apr 1998, boddhisatva wrote: What you fail to admit is that the purpose of a *capitalist* economy is not to produce goods, but money. Money is merely the financial form of capital. There are plenty of other subforms of the larger abstraction (industrial, intellectual, social, cultural, etc.), each of which competes against its compadres for its share of the social surplus. The yen or dollar is merely the nominalistic sign of these larger social antagonisms. -- Dennis
Re: Global Intelligence: Japan
Barkley writes: And is it not true that the growth rate was higher in 1996 than in 1995 and still higher in 1997, in short, it is accelerating? As someone who embraces a Schumpeterian theory of long waves, Barkley, you shouldn't be concerned with real GDP numbers. More apt would be productivity measures, preferably labor productivity rather than bogus "total factor productivity" stats. Of course, here there is argument too: have the recent surges in labor productivity growth been merely a normal short-cyclical uptick or the sign that the long-term trend has returned to being similar to the "good old days" (GOD) of the 1950s 1960s? Here of course, we get into the debate about "why hasn't the communication/information technical revolution paid off very well?" that the mainstream economists are chewing over. But pretend (ooops, I mean "assume") that there _is_ a supply-side renaissance going on. Maybe we can learn from the experience of previous supply-side shifts. Back around 1919, one can find that US labor productivity stats show a kink, an upward ratchet of the labor productivity growth rate. That kind of "kink" fits with ideas of long waves or other theories of stages of capitalist development. The problem is that 10 years later the supply surge encountered a demand debacle. As the French "Regulationists" say, the accumulation regime didn't have a mode of regulation that would allow stable growth. Or to paraphrase James Tobin, god gave us two eyes, one for supply and one for demand. Many Schumpeterians close one of those eyes, ignoring the demand side. On the demand side, GDP numbers play a role, though we shouldn't be looking as simply US statistics. Just as back in 1929, the US economy's health is highly dependent on the health of the rest of the world. in pen-l solidarity and without gratuitous use of academic titles, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html "Dear, you increase the dopamine in my accumbens." -- words of love for the 1990s.
Re: Global Intelligence: Japan
Jim, Well, I don't want to redo our previous discussion of this where nearly all these points were gone over. I don't have any serious disagreement with anything you have said. I do note that (unless there is a message lurking I haven't seen yet) that Doug did not disagree with any of the rest of my generalizations about the global economy, just my US GDP stats. I do thihk that a lot of unmeasured stuff is going on, e.g. the spread of the internet. These things are not in the official GDP data for reasons that are pretty well known (new commodities and all that). I also agree that in some real sense, however measured, it is productivity that matters. Thus the 1980s were a fake. The US stock market loved the decade because Reagan had cracked labor for the capitalists and so defended profits. But that did not say anything about the real state of productivity in the economy. Maybe it is just "faith," but I do think that we are going through a Schumpeterian qualitative technological transformation, and I see these as the key to long wave upswings. Do they generally lead to their own demise, often through demand-side blowouts? Indeed, and 1929 is a very good example. But this suggests that the downswing is probably a ways off. But then, besides all my weirdo chaos/catastrophe stuff, I also buy into Keynesian uncertainty. Anything can happen. We could have a Great Depression tomorrow. Some on this list have told scenarios erupting out of East Asia that could lead to it. I don't rule it out, but I wouldn't "bet the farm" on it either. Barkley Rosser On Wed, 8 Apr 1998 08:09:49 -0700 James Devine [EMAIL PROTECTED] wrote: Barkley writes: And is it not true that the growth rate was higher in 1996 than in 1995 and still higher in 1997, in short, it is accelerating? As someone who embraces a Schumpeterian theory of long waves, Barkley, you shouldn't be concerned with real GDP numbers. More apt would be productivity measures, preferably labor productivity rather than bogus "total factor productivity" stats. Of course, here there is argument too: have the recent surges in labor productivity growth been merely a normal short-cyclical uptick or the sign that the long-term trend has returned to being similar to the "good old days" (GOD) of the 1950s 1960s? Here of course, we get into the debate about "why hasn't the communication/information technical revolution paid off very well?" that the mainstream economists are chewing over. But pretend (ooops, I mean "assume") that there _is_ a supply-side renaissance going on. Maybe we can learn from the experience of previous supply-side shifts. Back around 1919, one can find that US labor productivity stats show a kink, an upward ratchet of the labor productivity growth rate. That kind of "kink" fits with ideas of long waves or other theories of stages of capitalist development. The problem is that 10 years later the supply surge encountered a demand debacle. As the French "Regulationists" say, the accumulation regime didn't have a mode of regulation that would allow stable growth. Or to paraphrase James Tobin, god gave us two eyes, one for supply and one for demand. Many Schumpeterians close one of those eyes, ignoring the demand side. On the demand side, GDP numbers play a role, though we shouldn't be looking as simply US statistics. Just as back in 1929, the US economy's health is highly dependent on the health of the rest of the world. in pen-l solidarity and without gratuitous use of academic titles, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html "Dear, you increase the dopamine in my accumbens." -- words of love for the 1990s. -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: Global Intelligence: Japan
Doug, Of course you're right. How could I have made such insufferably idiotic statments? Barkley Rosser On Tue, 7 Apr 1998 22:58:07 -0400 Doug Henwood [EMAIL PROTECTED] wrote: Rosser Jr, John Barkley wrote: And is it not true that the growth rate was higher in 1996 than in 1995 and still higher in 1997, in short, it is accelerating? How short-termist. If you look at a chart of actual/trend GDP you'd see that that acceleration has merely brought the actual back to trend, with no breakout remotely visible. If you go back a few years, to the early 1980s as a base, there's no evidence of acceleration. This expansion hasn't seen anything like the 4% of 1983 or 7% of 1984. Doug -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: Global Intelligence: Japan
Is there anything but faith involved in the theory of long waves? I look at the data people present and it sure looks as if one could interpret them differently or according to a different theory. The best data for long waves concerns price movements, not quantities such as real GDP, by the way. I look at the theories and they're pretty shaky and sometimes contradict each other. This is largely true. I recall excellent article by Rosenberg and Frischtak on this issue. However, one way of looking at the long wave thesis is via technological change (radical innovations), narrowed down to specific industries. It may not be the 50 year cycles but long enough to merit the term. Of course this also has its pitfalls, that is how to conceptualize tech change (which are incremental and radical) etc. Cheers, Anthony D'Costa
Re: Global Intelligence: Japan to fall?
Rosser Jr, John Barkley wrote: I have argued on this list in the past that we are in the early stages of a long wave upturn and I think that the boom in many stock markets reflects the building into present values of the expected future rising dividends to accrue from that long wave upswing (tied to the benefits of the computer/information revolution finally filtering through the real economy, along with the general weakness of workers against capitalists around the world (which might change)). Early stages? On the evidence of the stock market? Let's look at crucial market indicators at previous peaks and troughs, at least according to canonical Wall Street K-wavers. This first panel of this chart shows the average dividend yield for the five years before the turning point year, and the 5-year real change in stock prices. The second panel shows the indicators for three recent years. U.S. STOCK MARKET, DIVIDEND YIELDS AND REAL PRICE CHANGE troughs peaks ---- 5-yr avg 5-yr real5-yr avg 5-yr real div yldchange div yldchange 1843 10.6% 8.2% 1864 7.7% -9.4% 1897 4.3%-13.3% 1920 6.2%-50.8% 1932 4.8%-47.9% 1974 3.2%-37.0% trough candidates... 1982 5.2%-23.5% 1992 3.4% 17.4% 1998 2.4%127.2% One interesting thing that emerges is that at K-wave peaks, the stock market has already had a pretty rough go of it. But at troughs, valuations are usually low, and prices have had a sinking spell (though not as bad as the peaks). The only recent year that looks like a plausible long-wave trough is 1982; valuations, measured by dividend yield, were low, and the market had taken a pretty serious hit. 1998 doesn't look like a peak candidate, by any means, but it sure doesn't look like the early phases of anything; it looks like a pretty mature mania, in fact. Doug
Re: Global Intelligence: Japan to fall?
I agree with most of Barkley's post but I have a couple of questions. -- Well, who knows what will happen next, but I would argue that the current "Japan is down and out and the US is up and running" stories may well be oversold. Dennis is correct on the long-run very strong fundamentals that the Japanese have. I also note that they are indeed now going through at least some financial restructuring and shaking out of corruption at the MOF that looks a bit like what the US was doing some time ago. My impression is that the restructuring is well short of what's needed. How many banks have been closed? And apparently the MOF has been fudging accounting rules yet again to keep its biggest banks withing BIS capital adequacy standards. Their bubble has been getting squeezed out for a long time now to the point where they look oversold to me, to put it in financial market terms. Furthermore, let us not forget that the US is by far now the world's largest debtor and Japan is by far the world's largest creditor. I don't think they will because of wanting the export stimulus of a low yen in the near term, but they could completely turn the financial tables tomorrow by dumping US assets and buying their own. The other day Hashimoto asked how can Japan be in such bad shape if it has so many foreign assets. Big deal. If anything the extent of its foreign assets is an indication of the lousy return on capital within Japan, for which there seems to be empirical support. I cannot see any scenario in which dumping a lot of those assets like US treasuries would redound to Japan's advantage. In flow terms the returns on those assets presumably finance some imports which is nice but hardly a substitute for growth. Best, Colin
Re: Global Intelligence: Japan to fall?
Colin, I did not forecast that the Japanese would dump US assets, indeed noted that in the short-run they gain from not doing so. I agree that they have not "hit bottom" with regard to the wringing/restructuring of their financial system. Several major banks have been closed, some bureaucrats have been busted, and the April 1 "big bang" has imposed some deregulation. This all has a ways to go to play itself out, and the forecast that US growth will beat Japanese growth I expect will extend beyond the next six months. Barkley Rosser On Tue, 07 Apr 1998 12:13:57 -0400 Colin Danby [EMAIL PROTECTED] wrote: I agree with most of Barkley's post but I have a couple of questions. -- Well, who knows what will happen next, but I would argue that the current "Japan is down and out and the US is up and running" stories may well be oversold. Dennis is correct on the long-run very strong fundamentals that the Japanese have. I also note that they are indeed now going through at least some financial restructuring and shaking out of corruption at the MOF that looks a bit like what the US was doing some time ago. My impression is that the restructuring is well short of what's needed. How many banks have been closed? And apparently the MOF has been fudging accounting rules yet again to keep its biggest banks withing BIS capital adequacy standards. Their bubble has been getting squeezed out for a long time now to the point where they look oversold to me, to put it in financial market terms. Furthermore, let us not forget that the US is by far now the world's largest debtor and Japan is by far the world's largest creditor. I don't think they will because of wanting the export stimulus of a low yen in the near term, but they could completely turn the financial tables tomorrow by dumping US assets and buying their own. The other day Hashimoto asked how can Japan be in such bad shape if it has so many foreign assets. Big deal. If anything the extent of its foreign assets is an indication of the lousy return on capital within Japan, for which there seems to be empirical support. I cannot see any scenario in which dumping a lot of those assets like US treasuries would redound to Japan's advantage. In flow terms the returns on those assets presumably finance some imports which is nice but hardly a substitute for growth. Best, Colin -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: Global Intelligence: Japan
Barkley writes: In my original post I said that we were "in the early stages of a long wave upswing," not "at the beginning of a long wave upswing." I think we have been in it for awhile. Is there anything but faith involved in the theory of long waves? I look at the data people present and it sure looks as if one could interpret them differently or according to a different theory. The best data for long waves concerns price movements, not quantities such as real GDP, by the way. I look at the theories and they're pretty shaky and sometimes contradict each other. Barkley, which theory of long wave are you using? Sure, the US has been in a boom for a few years. But has the world as a whole? If we're going to talk about long-wave upswings, we have to acknowledge globalization on some level (even though globalization theories may be weak). Remember also that in 1929, the US had been in a boom for a few years. It was also one of the few industrial economies that was doing well. Primary producers had been suffering for awhile. Speculative crashes had occurred in real estate and a financial mania was a-bubblin'. Just as nowadays, the benefits of the economic boom were distributed very unequally, with real wages stagnant despite increasing labor productivity. I don't think that we'll see a replay of 1929-33 and it's damn hard if not impossible to predict the future, but until I see a good theory of _why_ history repeats itself in long waves and _why_ the world economy is in the upswing phase (rather than, say, the downswing), the fears of debt-deflation that Greenspan has voiced will be more central to my understanding of what's going on than the seemingly irrational exuberance of long-wave theory. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html "The only trouble with capitalism is capitalists. They're too damned greedy." -- Herbert Hoover
Re: Global Intelligence: Japan
Jim, Yeah, and I guess I don't really want to rerun this particular thread that we sewed previously at some length. Sure, it's faith, umprovable clearly by the data. Yeah, looks stronger in prices than in GDP, etc. And I follow a Schumpeterian version, that is, waves of investment and output riding up on particular technologies that then reach some kind of diminishing returns/overinvestment, whatever, and then a long down phase. I don't have a solid series on world GDP, although I presume Doug will sharply correct me if I say anything too far off. But here is how I see the recent stuff. Upswing 1945-73, the famous "golden age." Downswing for about the next 20 years or so, with us now in a computer-related upswing. OK, East Asia is down, but they have been out-of-phase with the rest of the world (kind of like Texas in the US). It was the only region of the world to grow more rapidly in 1973-92 than it did during 1945-73 (except for Japan, and oil exporters grew more in 70s but not 80s). Although some say 80s was upswing, US did not grow that rapidly except for the 1983 8% bounce that gave Reagan his "Morning in America" 49 state sweep in 1984. Latin America was in terrible shape through the whole decade as was Africa and the Soviet bloc. Western Europe did OK in the late 80s, but generally was still slower than in the "Golden Age." Now we have the US in a fairly serious boom going faster over a longer period than any since before 1973. Western Europe appears to have pulled out of its long recession of the early to mid 90s and is accelerating generally (France and Germany are the laggards there). Parts of the Soviet bloc have more or less made the transition and are now growing rapidly, Poland with the highest growth rate in Europe (although Ireland may have a slight edge at the moment), although there are still some pockets of deep depression in that zone. Parts of sub-Saharan Africa appear to be taking off after long depression, although a few like Botswana were growing in the 1980s. Latin America is doing much better than the 1980s, although again there are some pockets that are not. The only region clearly not doing better is East Asia, although even there we are talking about slowdowns of still pretty high positive growth rates, with the exception of Japan which looks like it is about to go into an actual recession (I see its comeback to be after that clears up) and Indonesia. Two important caveats: 1) Almost everywhere income distribution is becoming more unequal, in many places massively so. This could trigger an enormous backlash. and 2) as Doug noted and I agree there is a real mania going on the financial markets, now going beyond anything justified by even a rational expectation of a long wave upswing. Could be a real blowout with major crashing consequences. So, maybe we are in the early phases of a long wave upswing, but I am not making any hard core predictions. I am an old chaos and catastrophe theorist and almost anything is possible. Barkley Rosser On Tue, 7 Apr 1998 11:38:47 -0700 James Devine [EMAIL PROTECTED] wrote: Barkley writes: In my original post I said that we were "in the early stages of a long wave upswing," not "at the beginning of a long wave upswing." I think we have been in it for awhile. Is there anything but faith involved in the theory of long waves? I look at the data people present and it sure looks as if one could interpret them differently or according to a different theory. The best data for long waves concerns price movements, not quantities such as real GDP, by the way. I look at the theories and they're pretty shaky and sometimes contradict each other. Barkley, which theory of long wave are you using? Sure, the US has been in a boom for a few years. But has the world as a whole? If we're going to talk about long-wave upswings, we have to acknowledge globalization on some level (even though globalization theories may be weak). Remember also that in 1929, the US had been in a boom for a few years. It was also one of the few industrial economies that was doing well. Primary producers had been suffering for awhile. Speculative crashes had occurred in real estate and a financial mania was a-bubblin'. Just as nowadays, the benefits of the economic boom were distributed very unequally, with real wages stagnant despite increasing labor productivity. I don't think that we'll see a replay of 1929-33 and it's damn hard if not impossible to predict the future, but until I see a good theory of _why_ history repeats itself in long waves and _why_ the world economy is in the upswing phase (rather than, say, the downswing), the fears of debt-deflation that Greenspan has voiced will be more central to my understanding of what's going on than the seemingly irrational exuberance of long-wave theory. in pen-l solidarity, Jim Devine
Re: Global Intelligence: Japan
Rosser Jr, John Barkley wrote: Now we have the US in a fairly serious boom going faster over a longer period than any since before 1973. Eh? US BUSINESS CYCLES average annualized GDP growth rate - troughpeakcontraction expansion 45Q4 48Q4 49Q4 53Q2 -1.6% 7.5% 54Q2 57Q3 -2.6% 3.9% 58Q2 60Q2 -4.4% 5.8% 61Q1 69Q40.5% 4.8% 70Q4 73Q4 -0.1% 5.2% 75Q1 80Q1 -3.0% 4.2% 80Q3 81Q3 -4.9% 4.2% 82Q4 90Q3 -2.3% 3.7% 91Q1 97Q4 -3.1% 2.8% 95Q4-97Q4 3.5% expansion averages 1945-90 4.9% 1973-90 4.1% In other words, the slowest post-WW II expansion. Even if you look only at the last two years, it's the worst number. So where's the boom, Barkley? Latin America is doing much better than the 1980s, although again there are some pockets that are not. I think it'd be more accurate to say there are pockets that are doing well while the rest of the garment ain't. I'll leave it to others to comment on the African "boom." Doug
Re: Global Intelligence: Japan to fall?
On Tue, 7 Apr 1998, Colin Danby wrote: The other day Hashimoto asked how can Japan be in such bad shape if it has so many foreign assets. Big deal. If anything the extent of its foreign assets is an indication of the lousy return on capital within Japan, for which there seems to be empirical support. Where's the evidence for this? The Bank of Japan's website has a chart of corporate profitability which shows, on average, an upswing from 3-4% profit on revenues to 4-5% in the late Eighties, then a decline to 2-3% in the early Nineties, followed by a renewed upswing in the mid-Nineties. Of course, if you're talking return on shareholder capital, then that's obviously been terrible, due to the crash of the Nikkei bubble. But those are just the paper profits of selected rentiers, not the average profitability of the entire economic system. Selected industrial sectors may be in recession, but the Japanese economy as a whole seems to be lurking like Godzilla beneath the surface of the Pacific, its power and might intact but temporarily quiescent. -- Dennis
Re: Global Intelligence: Japan
Doug, And is it not true that the growth rate was higher in 1996 than in 1995 and still higher in 1997, in short, it is accelerating? Barkley On Tue, 7 Apr 1998 17:13:49 -0400 Doug Henwood [EMAIL PROTECTED] wrote: Rosser Jr, John Barkley wrote: Now we have the US in a fairly serious boom going faster over a longer period than any since before 1973. Eh? US BUSINESS CYCLES average annualized GDP growth rate - troughpeakcontraction expansion 45Q4 48Q4 49Q4 53Q2 -1.6% 7.5% 54Q2 57Q3 -2.6% 3.9% 58Q2 60Q2 -4.4% 5.8% 61Q1 69Q40.5% 4.8% 70Q4 73Q4 -0.1% 5.2% 75Q1 80Q1 -3.0% 4.2% 80Q3 81Q3 -4.9% 4.2% 82Q4 90Q3 -2.3% 3.7% 91Q1 97Q4 -3.1% 2.8% 95Q4-97Q4 3.5% expansion averages 1945-90 4.9% 1973-90 4.1% In other words, the slowest post-WW II expansion. Even if you look only at the last two years, it's the worst number. So where's the boom, Barkley? Latin America is doing much better than the 1980s, although again there are some pockets that are not. I think it'd be more accurate to say there are pockets that are doing well while the rest of the garment ain't. I'll leave it to others to comment on the African "boom." Doug -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: Global Intelligence: Japan
Rosser Jr, John Barkley wrote: And is it not true that the growth rate was higher in 1996 than in 1995 and still higher in 1997, in short, it is accelerating? How short-termist. If you look at a chart of actual/trend GDP you'd see that that acceleration has merely brought the actual back to trend, with no breakout remotely visible. If you go back a few years, to the early 1980s as a base, there's no evidence of acceleration. This expansion hasn't seen anything like the 4% of 1983 or 7% of 1984. Doug
Re: Global Intelligence: Japan to fall?
Dennis R Redmond wrote: On Tue, 7 Apr 1998, Colin Danby wrote: The other day Hashimoto asked how can Japan be in such bad shape if it has so many foreign assets. Big deal. If anything the extent of its foreign assets is an indication of the lousy return on capital within Japan, for which there seems to be empirical support. Where's the evidence for this? As resident data geek, it is my pleasure to report, thanks to Annex Table 25 in the OECD Economic Outlook, December 1997: rates of return on capital in the business sector 1970-80198219891997 US 19.4% 17.224.128.8 Japan16.9 13.014.912.5 EU 13.7 11.213.815.0 Cross-country comparisons, a footnote warns, should be made with "great care." But the trend is clear - Japan in a downtrend, the EU flat to slightly up, and the US rocketing skyward. But what was it Adam Smith said about the profit rate being highest in countries going most rapidly to ruin? Doug
Global Intelligence: Japan
Doug, Just a further point. In my original post I said that we were "in the early stages of a long wave upswing," not "at the beginning of a long wave upswing." I think we have been in it for awhile. I can even see the argument of SSA crowd that 1982 might have been a turning point due to changes in class relations, post-Fordism, blah blah. But, the whole decade of the 1980s continued to be haunted by financial crises in the US banking sector that look like what is going on in Japan today. That did not really play itself out until the recession of 1990-91. Since then it's been pretty smooth sailing for US capitalism, especially with the collapse of whatever you want to call the system overseen by what was the USSR. Barkley Rosser -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: Global Intelligence: Japan to fall?
Well, who knows what will happen next, but I would argue that the current "Japan is down and out and the US is up and running" stories may well be oversold. Dennis is correct on the long-run very strong fundamentals that the Japanese have. I also note that they are indeed now going through at least some financial restructuring and shaking out of corruption at the MOF that looks a bit like what the US was doing some time ago. Their bubble has been getting squeezed out for a long time now to the point where they look oversold to me, to put it in financial market terms. Furthermore, let us not forget that the US is by far now the world's largest debtor and Japan is by far the world's largest creditor. I don't think they will because of wanting the export stimulus of a low yen in the near term, but they could completely turn the financial tables tomorrow by dumping US assets and buying their own. I have argued on this list in the past that we are in the early stages of a long wave upturn and I think that the boom in many stock markets reflects the building into present values of the expected future rising dividends to accrue from that long wave upswing (tied to the benefits of the computer/information revolution finally filtering through the real economy, along with the general weakness of workers against capitalists around the world (which might change)). OTOH, when we reach a point as we are now seeing when analysts such as James Glassman start spouting off about how the traditional laws of stock valuation have been changed, blah blah, this begins to look like the more advanced stages of a speculative bubble where people start telling themselves that "the sky is the limit." I remind everyone that ten years ago it was Japan that was riding high and the US was not, leading to all the Japan-bashing and apocalyptic yapping from people like Clyde Prestowitz and Michael Crichton. I am not going to say that we shall return to that ten years from now, but there are a lot of very strong fundamentals in the Japanese economy. It still looks to be the biggest rival for the US over the next several decades, not anybody in Europe, much less China. Maybe shorting the yen over the next six months will make money, but I wouldn't hold my breath on that one over the next six years. Barkley Rosser On Mon, 6 Apr 98 16:15:25 EDT boddhisatva [EMAIL PROTECTED] wrote: Dennis, Okay, you've been plugging this pro-Japanese Keynesian line for a long while and Japan has been doing nothing but sucking wind. I'm buying puts on the Yen. Are you going to put your money where your agitprop is? Japan can't do any more with cheap money that is not rationalized to the market as long as they're capitalist, which they are. Keynesianism doesn't work because the only real discipline *under capitalism* is shareholder value. The bottom line has to be the bottom line. Otherwise the credit system ends up extending credit on the basis of irrational valuations. Initially, cheap credit is an unqualified good. Managements may serve consumer markets well initially, but without discipline they need not continue. As long as cheap Japanese credit props up failing companies, really productive investment will stagnate. My opinion is that the stimulus concepts, whether "supply-side" or demand side are essentially moot. The financial house has to get in order or Japan is in for serious trouble. peace -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: Global Intelligence: Japan to fall?
boddhisatva wrote: Like I said: "Short the Yen. Fund the revolution." Dennis responds: Only if you use the profits to buy East Asian stocks. It's quite possible that Japan is having its "long 1929." That is, despite the fact that it's a power-house when it comes to production (as Dennis emphasizes), it could be having a severe financial and realization (aggregate-demand) crisis of the sort that hit the US back in the early 1930s. (BTW, among the manufacturing powers, the Collapse of 1929-33 _mostly_ hit the US and Germany. England was already stagnating; France delayed its collapse, etc. Primary-products producers had been suffering for a decade.) A few years ago, the social-democratic international affairs expert Walter Russell Mead speculated that Japan's collapse could stimulate world collapse, just as the US collapse in the early 1930s pulled the rest of the world down. Maybe that scenario applies now, especially with a bunch of other E. Asian countries falling, pushing exports to survive, joining the world-wide competitive austerity. Also, the US growth process imitates that of the 1920s much more that it did when Mead wrote. (For more, see my article in the 1994 RESEARCH IN POLITICAL ECONOMY.) Of course, it's hard to know. If I could predict the future, I wouldn't tell you my predictions because that would interfere with my ability to profit from them. ;-) Though it's unfashionable to say nice things about the welfare state these days, it's pretty obvious that Asia is presently paying the price for underdeveloping its welfare states. No real wage increases + bankrupt American consumers = one gigantic case of overcapacity. I wouldn't call US consumers "bankrupt," but the lack of sufficient real wage increases fits with what I said above. It's more accurate to say that current US consumer debt/income ratios are hard to sustain. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html "The only cause of depression is prosperity." -- Clement Juglar.
Re: Global Intelligence: Japan to fall?
Dennis, Okay, you've been plugging this pro-Japanese Keynesian line for a long while and Japan has been doing nothing but sucking wind. I'm buying puts on the Yen. Are you going to put your money where your agitprop is? Japan can't do any more with cheap money that is not rationalized to the market as long as they're capitalist, which they are. Keynesianism doesn't work because the only real discipline *under capitalism* is shareholder value. The bottom line has to be the bottom line. Otherwise the credit system ends up extending credit on the basis of irrational valuations. Initially, cheap credit is an unqualified good. Managements may serve consumer markets well initially, but without discipline they need not continue. As long as cheap Japanese credit props up failing companies, really productive investment will stagnate. My opinion is that the stimulus concepts, whether "supply-side" or demand side are essentially moot. The financial house has to get in order or Japan is in for serious trouble. peace
Re: Global Intelligence: Japan to fall?
On Mon, 6 Apr 1998, boddhisatva wrote: Okay, you've been plugging this pro-Japanese Keynesian line for a long while and Japan has been doing nothing but sucking wind. I'm buying puts on the Yen. Are you going to put your money where your agitprop is? Grad students have other priorities, like food and shelter. And since when is pointing out things like Japan's 28% investment rate, or the fact that the Nikkei is a screaming buy, the same as being pro-Japanese? Is any criticism of Wall Street somehow the same thing as being pro-Teutonic, pro-Japanese, or pro-Italian (gotta get that last Axis power in there)? As long as cheap Japanese credit props up failing companies, really productive investment will stagnate. My opinion is that the stimulus concepts, whether "supply-side" or demand side are essentially moot. The financial house has to get in order or Japan is in for serious trouble. Where are these failing companies? What are their names and assets? And how much are they losing? Sure, Hitachi's chip division is getting pounded right now. So is Samsung, so is HP, so is Motorola, so is Micron. It's called a recession, when production outpaces consumption and has to be throttled back, pending the next upturn. -- Dennis
Re: Global Intelligence: Japan to fall?
C. Devine, I don't think that consumer debt is necessarily the crisis people assume it to be. As long as the banks feel they can get payed back, and they do, there doesn't seem to be any imminent crisis. Savings, in my opinion, are over-rated. My question to the real economists is what the difference between people giving money to banks through deposits and people giving money to banks by providing them high-interest loan assets through consumer credit is - effectively. The Japanese save a ton, but that 9 trillion dollars in Yen that they save may be worth six trillion dollars pretty soon if the for-ex situation goes into the tank. peace
Re: Global Intelligence: Japan to fall?
James Devine wrote: I wouldn't call US consumers "bankrupt," but the lack of sufficient real wage increases fits with what I said above. It's more accurate to say that current US consumer debt/income ratios are hard to sustain. Greenspan was asked about consumer debt loads when he addressed the American Society of Newspaper Editors last week. He said he wasn't worried, because assets have grown in line with debts. Such sophistication for the world's most powerful financial official, and such pointed questioning by our senior journalists! No acknowledgment that 1) debts are owed and assets are held by different sets of households, and 2) when debts rise so do assets, by definition, since one person's debt is another's asset. Doug
Re: Global Intelligence: Japan to fall?
On Sun, 5 Apr 1998, boddhisatva wrote: Like I said: "Short the Yen. Fund the revolution." Only if you use the profits to buy East Asian stocks. If Japan was going to go belly-up, it would've done so in 1993, when the pressure of high interest rates and negative growth threatened to implode the Japanese banking system. As long as interest rates stay low and the keiretsu continue to bail out their SE Asian subsidiaries, Asia will stay afloat (which is not the same thing, of course, as prosperity). Though it's unfashionable to say nice things about the welfare state these days, it's pretty obvious that Asia is presently paying the price for underdeveloping its welfare states. No real wage increases + bankrupt American consumers = one gigantic case of overcapacity. Sony's chairperson, of course, doesn't want to hear this -- his assumption is that neoliberal tax cuts will be enough to substitute for a genuinely multinational Keynesianism. Note that Sony is that rare thing, a very independent company, not beholden to any of the major Japanese keiretsu groups, and heavily dependent on precisely the sort of consumer electronics and entertainment markets which will expand the fastest if such policies were to be enacted. Doom-mongering in late capitalism is merely market-positioning for the next consumer boom. Incidentally, I hear Motorola is planning to invest umpteen zillions in Cracow, Poland, in the near future; a $600 million joint venture with Siemens in Desden is already up and running. It looks like Round One of the global East Asia vs. EU slugfest over who gets to inherit the mantle of the Pax Americana has gone to the Eurobourgeoisie. -- Dennis
Re: Global Intelligence: Japan to fall?; Workers of the World, Call Your Broker
[...] The second aspect is its effect on Japan itself. Since the end of World War II Japan has been a liberal democracy, a system imposed by the United States. If Japan goes into a depression, it will be a very different country than the prosperous and cocky Japan of the 1980s. With that difference will come wrenching political changes. We urge analysts to study the 1920s in order to get a sense of the possible evolution of Japan, should Ohga be correct. Amen. In 1960 a million snake-dancing students kept Ike at bay for 4 days, but what's the story today: Does Japan have a left, and is it ready to do something other than McNeil-Lehrer tripping on TV? valis
Re: Global Intelligence: Japan to fall?; Workers of the World, CallYour Broker
To whom..., Like I said: "Short the Yen. Fund the revolution." peace
Global Intelligence: Japan to fall?; Workers of the World,Call Your Broker
_ Watch Monday, April 6, for STRATFOR's Global Intelligence Update Quarterly Forecast _ Global Intelligence Update Red Alert April 3, 1998 Sony's Chairman Warns of Impending Collapse of Japanese Economy Norio Ohga, Chairman of Japan's Sony Corporation, warned today that Japan's economy was close to collapse and that Japan's collapse could lead to a worldwide recession. According to Ohga, the Japanese economy was facing its most difficult time ever. He compared Japanese Prime Minister Hashimoto to Herbert Hoover: "What President Hoover was saying then, there are so many similarities with what Prime Minister Hashimoto has been saying recently. Hoover triggered worldwide recession. I just hope remarks by Prime Minister Hashimoto won't trigger worldwide recession". According to Ohga, the central problem facing Japan is deflation, driven by a lack of consumer spending in Japan. Ohga therefore called on the Japanese government to stimulate the economy, increasing consumer spending and stabilizing prices. Ohga has merely stated the obvious. Japan has been stagnant throughout most of the 1990s and its condition is worsening. The Bank of Japan's "business condition diffusion index," which tracks business sentiment has fallen to the worst level since 1994. This understates the problem. The extended malaise of the Japanese economy is wreaking structural damage as time goes on. Both Daiwa and Tokai banks announced cuts in lending to large companies while it was announced that capital spending in general would decline in 1998. As with the United States in the 1970s, the decline in the availability of capital triggered by the banking crisis means an increasingly aging and less efficient industrial plant. As this happens, Japan's exports become less competitive, increasing pressure on the yen. As the yen declines, the willingness of investors to invest in yen denominated paper declines, increasing the capital crisis. The obvious answer is to stimulate the economy, as Ohga suggested. But Japan's financial condition is much worse than the U.S. condition in the early 1980s. Stimulating consumption must come at the expense of the savings rate. A high savings rate at low interest is now and has always been the foundation of the Japanese banking system. The availability of nearly free money to banks that are in dire trouble is the only thing that permits them to continue functioning. Eliminate the constant infusion of savings and the banking system would collapse and with it the inefficient, linked companies who depend on cheap money to maintain their balance sheet. Increasing domestic consumption is the long-run solution, but as the Japanese bureaucrats understand very well, it is not clear how to get there from here. Increased consumption would stimulate the economy, but only after knocking the bottom out of the banking system. Ohga, who heads one of Japan's more successful companies, is not completely sensitive to the precarious condition of most other Japanese companies. This means that Ohga's warning should be taken seriously while his solution cannot be. Ohga's warning is an important turning point in the Japan story, since it represents a dire prediction from a leader of the Japanese business community, someone who cannot be dismissed as merely a sensationalist or alarmist. If Ohga is worried, everyone should be. The problem is that there does not appear to us to be any way out of Japan's dilemma. This is not the first time Japan has faced this dilemma. During the 1920s, a very similar banking crisis took place. The result was a devastating recession and the emergence of political extremism. Until this point, analysts have been focused on the question of whether or not Japan can avoid economic disaster. It has been our position that Japan's economic fate has been sealed ever since the Japanese government decided to follow a strategy that refused to deal with the emerging banking crisis--that is, since around 1992. Now, Sony's leader has come close to the same conclusion, at least in the sense of facing the magnitude of the crisis. From our point of view, the central question is no longer whether the Japanese economy is facing calamity, but rather what the consequence of that calamity is going to be. One aspect of this is its effect on the rest of the world. We are not certain that Japan's decline will have an enormous negative effect outside of Asia. The second aspect is its effect on Japan itself. Since the end of World War II Japan has been a liberal democracy, a system imposed by the United States. If Japan goes into a depression, it will be a very different country than the prosperous and cocky Japan of the 1980s. With that difference will come wrenching political changes. We urge analysts to study the
