I think that all of this agreement about the cause of the Japanese depression.
Japan used macroeconomic policies to prop the economy up in the wake of the oil
shocks, leading to rapid accumulation and a wild run-up in land prices.
Finally the overhang caught up with Japan.
I would like to add
At 02:00 PM 3/24/00 -0500, you wrote:
I said I thought Japan looked to be in the throes of a classic
overaccumulation/profitability crisis. For decades, state policy and the
financial/governance structure permitted firms to invest to gain market
share without paying much attention to ROI. Now
Doug is suggesting that the problem _might_ be solved the good old Maggie
Thatcher or Attila the Hun way, imposing a shake-out that drives out the
weakling capitalists and imposing wage cuts, deunionization, etc. on the
working class. This would raise the rate of profit and eventually
Barney writes:
... the question is, does anyone still hoard? There are plenty
of virtually risk free, short term financial instruments. The municipal
bond market seems pretty damn liquid these days. And for those of us of
more modest means, there are interest bearing checking
accounts.
Keynes called this situation a liquidity trap and felt this
was a good argument for fiscal policy and government
investment programs. Unlike private firms, the federal
government can finance long-term projects with short-term
debt.
Ellen
How do you think the situation in Japan reflects
I think that we could say that Keynes was right as far as he went. Japan is
probably is good example of a liquidity trap as you can get.
The problem is that Keynes didn't go very far. The liquidity trap is fairly
reflection of the psychological state of investors. Unfortunately, he does not
I don't really understand the situation in Japan, but
I found the article in the most recent New Left Review
by Taggart very interesting. Bill Tabb wrote a very illuminating
piece on Japan for Dollars and Sense last year, as
well. Taggart argued (I think) that the analytical categories
of
Title: Re: [PEN-L:17381] Re: Re: Re: Re: ? Rentier's hoarding ?
Re the relevance of Keynes's idea of the liquidity trap for an analysis of the current situation in Japan.
For reaons Keynes himself gives, the functioning of psychological factors in Japan is likely to differ in important ways
Christian writes:
There are also significant risks to this strategy, if taken seriously. If
such "restructuring" were to provoke a more general banking / financial
system crisis, Japanese would dump all those dollars, bonds, and
dollar-denominated assets that it holds, which could spell the end
Barney writes:
... the question is, does anyone still hoard? There are plenty
of virtually risk free, short term financial instruments. The municipal
bond market seems pretty damn liquid these days. And for those of us of
more modest means, there are interest bearing checking
accounts.
I'd say that instead of hoarding, what can happen today is that the
illiquidity premium goes up (relative to cash), so that the illiquid assets
have to pay more for tying up one's assets (as people get wary about
capital losses on such assets). In this case, most people's portfolios
would
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