Japan Didn't Spend Enough?

Is the Treasury's Plan to 'Go Japanese' Doomed to Fail?

/PRNewswire/ -- In the latest issue of The Casey Report, the flagship publication of Casey Research, Managing Director David Galland and Chief Economist Bud Conrad have examined the decline of the Japanese economy since 1990 and note the many similarities, and a few key dissimilarities, to the United States' current crisis.

"Statements made by Treasury Secretary Tim Geithner suggest that he views the Japanese crisis as a useful comparison to the current situation in the U.S., except that Japan did not apply enough monetary stimulus early enough," says David Galland. "Our analysis suggests critical differences which could cause efforts to stimulate the economy back to life to fail."

Similar to the U.S., in the years leading up to its "Lost Decade" per-capita debt in Japan soared, by seven-fold. Also similarly, the debt bubble in Japan collapsed, dealing a crushing blow to equities and real estate markets. The Japanese government responded to its financial crunch by going on a fiscal stimulus spree. The Japanese government debt grew to 160% of the GDP. The United States' debt is currently 75% of the GDP but expected to climb significantly as further stimulus is applied.

Japan also cut its lending rate to zero percent, just as the United States has done. The Bank of Japan, similar to our Federal Reserve, acquired Japanese government bonds and providing more liquidity to weak banks. That this approach did not provide the desired results and did not revive the Japanese stock market, Treasury Secretary Geithner attributes to Japan's hesitant approach, indicating a willingness to act more forcefully, and to continue applying stimulus, in order to restart the economy.

"The Treasury secretary's words and the plans so far revealed seem to us to misunderstand some key differences between the U.S. economy now, and Japan's then," says David Galland:

-- Japan had a current account surplus throughout its crisis which
provided support to the yen, whereas going into its crisis the U.S.
has a record current account deficit and is the world's largest debtor
nation.
-- The Japanese are savers by nature. Americans are big spenders and are
entering the crisis with little or no savings.
-- The work ethic and the quality of primary education in the United
States have declined more than in Asia.
-- There are record amounts of U.S. dollars in the hands of foreigners
who are paying close attention to actions by our Treasury department.
Excessive stimulus could trigger a devastating exit from the dollar,
creating a vicious circle of a weakening dollar and soaring interest
rates.

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Freedom, That Beautiful Economic Index

What can I do but belt out "Freedom, oh freedom"?

North America is the world leader in economic freedom, boasting two of the 10 freest countries in the 2009 "Index of Economic Freedom," published annually by The Wall Street Journal and The Heritage Foundation......http://thebusinessbriefcase.blogspot.com/2009/01/north-america-leads-world-in-economic.html

Reagan's Words Still the Truth

Hellooooo Washington! Anybody home?

“Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.” -Ronald Reagan

Constitutional Convention: Is Our Constitution in Danger?

The last Constitutional Convention was held in 1787 when our founding fathers sought to replace the Articles of Confederation. That was a good thing.

Today, there is a call from way too many states for another Constitutional Convention. What is the purpose of this call? What is the real agenda? Is it for some minor changes or is it destroy our Constitution, the cornerstone of our government?

Should this call go forward, history shows us a way to stop it.

Back in February 1787 when the call went out, the convention was set for May. When the date rolled around, there was not a quorum present. So, if a quorum doesn't show up, the convention cannot happen.

It also takes a quorum to ratify a Constitution. Look back in history and see how that process happened. Perhaps, we should really look at history and copy it. Put all the delegates in a room that is not air conditioned and that has its windows shut and shutters nailed. Keep them there with no time off until the deed is done. Last time, for only 13 states, it took four months.

If, indeed, minor changes are the true agenda for this proposed Constitutional Convention, then maybe an amendment may be more prudent.

My belief is we must hold our elected officials to the oath of office they take--- to protect and defend the Constitution of the United States.

Just a thought as I recall the values of our founding fathers and the freedoms they gave to us.