Thursday, March 14, 2002

WORTH THINKING ABOUT: AS THE WORLD SHRINKS America's new place in the world's shrinking geography: " . . . at the turn of the twentieth century the western frontier--and free land in particular--was the guarantor of American democracy . . . because taming the land was an eminently practical task, ideology had a marginal effect on this emerging American life, compared to that of Europe." "Through most of the twentieth century, oceanic distances were formidable enough to secure America's virtual monopoly over its large internal market in an age of industrial expansion and economies of scale. Oceans also protected the United States from the devastations of the First and Second World Was, giving us a relative advantage over Europe and Asia that allowed for the 'American Century.' Our protected landmass with its abundance of natural resources was an ideal setting for the Industrial Age, whose passing has only recently begun.From the end of the Civil War to 1973, the U.S. economy, largely insulated from foreign competition, grew at an average rate of 3.4 percent annually, excluding inflation. The real wage nearly doubled from one generation to the next, so that the American Dream in these years came true and optimism was the official American religion." "But now we face the loss of the protection that geography once provided. Because the United States has been so overwhelmingly a creature of geography, in the twenty-first century shrinking distances will affect us more than they will our competitors, whose economic development never depended on continental isolation." ... [more] 1:10:08 PM  Google It!  comment  []

Japan Upgrades Assessment of Economy for First Time in Nearly 2 Years March 14, 2002 04:04 AM ET "Japan's government upgraded its assessment of the economy Thursday for the first time in nearly two years, detecting some signs of bottoming out amid severe conditions. 'The economy is still in a severe situation, but some signs of bottoming out can be seen,' the Cabinet Office said in its monthly report on the economy for March.  The report reflected budding hopes that rebounding demand overseas might boost Japan's economy, which slipped deeper into recession in the three months to December as gross domestic product shrank at a 4.5% annual rate.  It was the first time since June 2000 that the government upgraded its economic assessment. " "'Exports are bottoming out, and there are signs that production is bottoming out . . . The leveling-off of exports, which plunged last year and dragged Japan deep into recession, is helping to put a floor under industrial production. . . . the inventories-shipments ratio has fallen, a sign of tighter supply-demand conditions. . . . Japan's current account surplus grew for a fourth straight month in January, ballooning 224% to 709 billion yen ($5.48 billion) - much wider than expected. . . . Personal consumption, which accounts for more than half of GDP, is flat, the government said, upgrading its assessment from February, when it said spending was weakening. . . . wholesale prices are falling at a slower pace, a sign deflationary pressure has eased a bit thanks to a weaker yen." "Still, Japan's economy isn't out of the woods yet. . . . corporate capital spending, the second-biggest chunk of the economy. . . . is 'falling sharply' . . . the grim view also reflected indications investment will keep falling well into autumn. Machinery orders . . . dropped a record 15.6% on month in January on the back of two straight quarters of declines. . . . the outlook remains clouded by high unemployment and falling wages. Employment conditions are sure to worsen in months ahead as companies cut payrolls to restructure their operations or simply fall victim to the severe economic conditions." ... [more] 8:52:49 AM  Google It!  comment  []

Some Japanese Are Hoarding Gold March 14, 2002 "While Japan has had the world's fastest- growing major stock market this year and the yen has jumped nearly 3 percent against the dollar in the last month, a small but growing number of Japanese investors are preparing for the worst and hoarding gold. With limits looming on bank deposit insurance, banks tottering under bad debts and the government printing money in an effort to create inflation, sales of gold are expected to come close to quadrupling this quarter, compared with the period last year . . . In February . . . his gold sales were seven times those in February last year."  " . . . consumer unease about the direction of the yen, the economy and the banks. . . . On April 1, federal insurance on time deposits, currently unlimited, is to be restricted to $75,000 for each account . . . " "This month, the yen has strengthened as Japanese companies have repatriated assets to close their books for the end of the fiscal year, March 31." "Some investors, particularly younger people, are also shifting into dollars and euros . . . That shift is still relatively small . . . " "In a regional consumer confidence poll released last month by MasterCard International, the Japanese ranked as Asia's biggest pessimists." "[A gold trader] discounted this week's run- up of the yen and Tokyo stock prices, saying Japan remained economically weak. 'The reasons for buying gold are not going to go away in a hurry.'" ... [more] 8:30:36 AM  Google It!  comment  []