Comment on Forbes' Alarmist Article

Richard Katz (Oriental Economist Report)

The following is a slightly modified version of Mr. Katz's comment, originally posted in the Japan-U.S. Discussion Forum, on Benjamin Fulford's article "The Panic Spreads" in Forbes Global (Feb. 18; http://www.forbes.com/global/2002/0218/022.html)

Forbes' current alarmist article is the opposite number from a cover headline a few years back telling readers something like “Buy Japan Before It's Too Late.” At the time, the Nikkei stock index was around 20,000 to 22,000.

Unfortunately, these meltdown scares are believed by, and retailed by, even some clued-in people, just as the restructuring/recovery hype of 1999-early 2000 was widely believed.

I would like to refute this alarmism. The key points are:

1) There is a crisis brewing at least as bad as 1997-98. Tokyo will do as in the past: always doing enough to avoid calamity, never enough to solve the underlying malady.

2) Almost all the countries, from Korea to Argentina, that have suffered true implosions are big trade deficit countries with simultaneous internal and external crisis. When the foreigners pulled their money out, oil and spare parts stopped coming in. Factories shut down. People were thrown on the street. That's not going to happen in Japan. It can, and will, simply throw a lot of money at the problem.

3) As for the reduction in the deposit guarantee to 10 million yen, 90 percent of households have savings accounts of less than 10 million. Those who have more can divide their savings among a few banks. The data through January makes it clear that companies and households are not withdrawing their money en masse, even from the second-tier regional banks--and certainly not from the banking system as a whole.

For his oped in London Financial Times (Feb. 11), see the following:
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT39QBF8JXC&live=true