From: an030@cleveland.Freenet.Edu (Broward Horne)
Newsgroups: talk.politics.theory,talk.politics.misc
Subject: Re: Deeper and Deeper we go!
Date: 19 Dec 1992 21:33:50 GMT
Organization: Case Western Reserve University, Cleveland, OH (USA)
Reply-To: an030@cleveland.Freenet.Edu (Broward Horne)
NNTP-Posting-Host: hela.ins.cwru.edu


In a previous article, nelson_p@apollo.hp.com (Peter Nelson) says:

>  I do??!  How so?   Companies have big layoffs and this means the 
>  federal government is on the way out??   Get real.  Companies have 


        Large government is inefficient and puts the U.S. at a disadvantage
worldwide.  For this reason alone, forces will act for change.  

>  "Ever"?    Then how come the market is higher today than it was
>  then?   That crash was a paper crash -- it didn't reflect any 
>  sudden change in the fundamentals.  Look, you're posting from a
>  .edu site so I assume you're young.   I've probably been investing 
>  since before you were born.   The "crash" of '87 was nothing.


      Yes, I see that you have been "investing".  That's why you lack
   knowledge of macro forces.  Too much time reading those small 
   numbers.

     
      Currently, Japan has around 300 BILLION in bad loans.
      Three months ago, the Economist reported 240 BILLION.
      Six months ago, another paper reported 200 BILLION.

   So, it looks like the Japanese economy is racking up 10-20 BILLION
   in bad loans PER MONTH.

      The estimated banking bailout in Japan ( from the Economist ) is
   now somewhere in the area of 500 to 800 BILLION dollars.


      That is roughly TWO to THREE times the U.S. S&L bailout cost. 
      Distributed on roughly HALF as many workers.
      WITHOUT a legal FDIC-style banking safety net.

   That works out to around $10-15K per WORKER in bailout costs.

      The Japanese has already demonstrated ( as did the U.S. in 1929 )
   a reluctance to confront the problem.  

      The Japanese government has already tampered, not once, but TWICE
   now ( as did the U.S. bankers in 1929 ) with their market, in an 
   attempt to re-inflate it:

     #1 -  when the market dropped to the 14,000 level, and it become 
   apparent the virtually the entire Japanese BANKING system, which 
   holds large quantities of stock for capital requirements, was about
   to collapse.  The government announced a 90 BILLION bailout plan.

     The Nikkei shot back up to 18,000, then slowly drifted down again,
   as it become obvious that the government was waffling on the plan.

    #2 - a few weeks ago, with the Nikkei headed towards 14,000 again,
   the government used social security funds to bail it out.  

        i)  This has tremendous political consequences.
        ii) I doubt it will work anyway.  The P/E of the Nikkei is 
   around 60, meaning that investors are earning roughly a 1.6% return
   on investment.  Meanwhile, Japanese earnings continue to plummet.

       At a Nikkei level of 11,000, the Japanese banking system is history.

   Japan has been outflowing cash into several areas.  All over SouthEast
   Asia, California, Oregon, many factories in the U.S.  Buying U.S. debt.

       Once their liquidity dries up, this outflow will cease.  In fact,
   I'm fairly sure the outflow to California is now negative.

       The implications for the Federal government should be obvious.

   The Japanese downturn was predicted to end in the summer of 1992.
   It is now predicted to end in the spring of 1993.   

       If the Japanese can successful reinflate their economy, a complete
   financial collapse will probably be avoided.  But I doubt this will
   happen.  Japanese real-estate has recently begun a downturn.  A loss
   of 50% of value would lay the Japanese banking system open to 
   TRILLIONS in losses.

>
>
>>  Belfast.
>   Belfast?   This has been simmering for years!   What does this have 
>   to do with anything?!


      You must have missed the news.  Riots over the GATT agreement.

>  of US and other governments running even bigger deficits as a %
>  of GDP and living to tell about it.


      Name one.  The only one that comes to my mind is Britain, and
   they aren't looking that damn good to me.  And I like your phrase:

      " Lived to tell about it ". 

   If that is your criteria, sure, the U.S. will survive.  Most of the 
   people won't be real happy about it, though.

>
>  Get a grip.
>

       In 1989, I started making plans to leave California.  I left in 1990.
   I've been following the migration patterns in Idaho.  During the late 
   70s, there was a large influx in Idaho, from Ca, until the 1980 downturn.
   Then a backflow started, for about 3 years.  Since then, the inflow has
   been ramping up steadily.   

        I had expected the 1991 downturn to reverse the flow again.  Guess
   what?  It didn't.  Migration has continued just as strong, through 1989,
   1990, 1991, and 1992.  I've been baffled.  

        In the "Great Reckoning", Rees-Mogg & Davidson quote Dr. Jack
   Lessinger, "Regions of Opportunity".  Great migrations appear to be
   a LEADING indicator of depressions.  If you've bothered to read,
   you will have seen a TREMENDOUS migration out of California, flowing
   into Oregon, Washington, Idaho, Utah, Arizona, and Nevada.  It is 
   now numbering in the hundreds of thousands. 

        I am no longer baffled.  The migration pattern is permanent and
    it isn't linked to a "recession".

        The question is no longer 

            " Are we in a depresionary era? "

       It is now

            " Can the respective governments contain it? "


       We can't help falling in Debt

       We fall deeper and deeper 
           The further we spend

        A dollar and sixty cents is spent 
           For each tax dollar we're forced to send

        Somebody said
          That " America's not dead "

        And I believed that instead
           of the memory of 
             What L.A. showed me
                Letting oligopies controlled me

         But HP sold me that  
           That it really is dead.
>---peter
>
>
>
>
>

Xref: sparky talk.politics.theory:5396 talk.politics.misc:63908