But that possibility becomes a reality only if the Japanese capitalists withdraw their investments from U.S. Treasury notes and dump their products in the U.S. market. This is not likely. First because Japanese bondholders are not likely to sell strong dollar dominated notes to reinvest them in a weak yen. Secondly, the U.S. will likely tighten its import quotas to limit Japanese exports which threaten to increase Washington's growing trade deficit. As Asian declines, the U.S. and to a lesser degree the European Union gain competitive positions.
Nationalist voices resonate throughout the region and liberalization policies are the hated targets.
As the governments proceed to implement IMF policies, the rising interest rates will lead to massive factory closures and large-scale unemployment. General strikes in South Korea and large-scale protests are likely in Japan. The restoration of U.S. hegemony could be the prelude to the Third U.S.-Asian Wars. While Washington privately gloats over its successes and the Wall Street stock market rises, this could be a pyrrhic victory. The Asian experience demonstrates that short term successes can lead to long term disasters.