Gloom in Japan as yen falls

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Gloom in Japan as yen falls

By Bayan Rahman and Gillian Tett in Tokyo - Dec 15 2000 18:10:20

The Japanese yen fell on Friday to its lowest level against the dollar for 16 months amid growing gloom about the outlook for the world's second largest economy.

The currency fell to touch Y112.51 against the dollar - a sharp contrast to the picture at the start of the year, when it nearly broke through Y100 to the dollar.

The downbeat mood was partly triggered by news that a large credit co-operative - a form of local bank - had failed in western Japan, reigniting concern that the country remains dogged by bad loans and potential bankruptcies.

Another factor damaging sentiment was fresh signs that Japan's policymakers are becoming more nervous about the outlook. In particular, there is unease that a slowdown in the US could be damaging to Japan, since the recent upturn in Japan's corporate sector has been triggered partly by higher exports.

The Economic Planning Agency said on Friday that it believed the economy was in a severe condition but remained on track to recovery. However, Kiichi Miyazawa, finance minister, ackowledged the business mood was becoming more nervous.

A "Tankan" survey of corporate sentiment by the Bank of Japan this week showed no improvement in the confidence of large manufacturing companies between September and December - the first time that this survey had showed no improvement for two years.

More strikingly, Jiji news agency quoted Masaru Hayami, governor of the Bank of Japan, also expressing suspicions that the economic recovery was "pausing on the landing on its way up the stairs".

The Bank of Japan on Friday said it would leave overnight interest rates unchanged at 25 basis points. However, if a sharp downturn emerges in coming months, it could provoke new criticism of the bank's decision to raise interest rates from zero in August.

Jeff Young, head of economic research at Nikko Salomon Smith Barney in Tokyo, said: "The economy has at least hit local peak and the expectations for the next quarter are not terribly positive."

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT39ZFD7SGC&live=true&useoverridetemplate=IXL8L4VRRBC&tagid=ZZZC19QUA0C#

-- Martin Thompson (mthom1927@aol.com), December 15, 2000

Answers

The wealth effect in the U.S. is dissipating. The worlds biggest consumers (Americans) are going to cut back on our spendthrift ways. That means less imports from Japan. The Japanese economy is already shaky from the humongous debts they've been carrying since their bubble popped. As our economy sinks look for the dollar to continue improving against the yen and even more bankruptcies here and abroad.

Why doesn't the IMF ever run out of money?

-- Guy Daley (guydaley@altavista.com), December 15, 2000.


They are not running out of money because they keep printing it on paper,and expanding the money supply.Most of this exists only on paper/or should I say on computer.A terrifying thought is that in time the debasement of our currency will cost all of us a very great deal.Im actually very surprized at how few people realize the danger of these monetary policies.

-- jax (jax@borg.com), December 16, 2000.

Anyone have the latest figures on how much US $$$ are actually in the US versus overseas? With Ecuador, the Phillipines, and Panama now adopting the US$ as their currency and El Salvador about to follow, how does this affect calculations such as those above?

-- Cash (cash@andcarry.com), December 16, 2000.

Moderation questions? read the FAQ