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Off the growth charts
Washington Times ^
| October 14, 2002
| Bruce Bartlett
Posted on 10/14/2002 6:32:51 AM PDT by thatcher
Edited on 07/12/2004 3:57:58 PM PDT by Jim Robinson.
Back in the 1980s, a lot of best-selling books were written about how the United States should emulate Japan. Pursuing free market economics based on individual entrepreneurs was passe, so it was often said by Ronald Reagan's critics. Instead, we should follow Japan's lead and actively use government to pick winners and losers. Its all-powerful Ministry of International Trade and Industry (MITI) was the wave of the future, we were told over and over again.
(Excerpt) Read more at washtimes.com ...
TOPICS: Business/Economy; Culture/Society; Editorial; Foreign Affairs; Government; Japan
KEYWORDS: bankingsystem; lowertaxes; macarthur; miti; reagan
The exploded money supply was created via real estate loans for real estate prices that were unsupportable other than with extreme, unsecured loans allowed by the banks. Much like what has happened in this country with credit card debt.
posted on 10/14/2002 6:32:51 AM PDT
The argument that MacArthur "smashed" the business cartels is patently false. They reformed very quickly.
Japan appeared to thrive because they were so focused on market share. That meant lots of jobs due to heavy production. Unfortunately, the market share came at the cost of profitability. The Japanese cooked the books to show profit and cashflow, but the cash actually came from the banks.
That is where the author gets it right. Eventually the banks needed these debts repaid, and it didn't happen. They found themselves seriously over exposed on loans, and under reserved on bad debt. The end result is a Japanese version of the S&L crisis. The difference is that their government was willing to work with the banks to hide the truth.
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