No man is an island

Louis Proyect lnp3 at
Wed Mar 14 10:21:39 MST 2001 man is an island, entire of itself;
every man is a piece of the continent, a part of the main.
If a clod be washed away by the sea, Europe is the less,
as well as if a promontory were, as well as if a manor of thy friend's
or of thine own were: any man's death diminishes me,
for I am involved in mankind,
and therefore never send to know for whom the bell tolls;
it tolls for thee.

John Donne (1572-1631)


NY Times, March 14, 2001

Fearing a Link to Japan Woes, Bush Advisers Ponder a Policy


WSHINGTON, March 13 - President Bush's economic advisers, in meetings at
the Treasury, the Federal Reserve and the White House, are grappling with
the implications of the recent political and economic distress in Japan,
fearing it could worsen the slowdown here and in Asia.

Mr. Bush and his aides came to office highly critical of the Clinton
administration's dealings with Japan - particularly its public criticism of
the country's economic management - and they promised they would not
lecture the Japanese in public about economic strategy. So far, they have
held to that promise.

But in recent days they have begun private meetings on the subject, at
which several officials have expressed concern about what one senior aide
called the "scary dynamic" under way between the world's two largest

"The downturn here feeds the pessimism in Japan," the official said,
because it is clear that the United States will not be buying as many
Japanese goods in the coming year. "And the faster Japan drops, the more it
undermines confidence here."

While there is debate over how much Japan's stock declines influence
declines here, and vice versa, market analysts who watch both New York and
Tokyo note that in the month of March Japanese companies often liquidate
holdings in the United States. The proceeds are sent back to Tokyo to help
bolster balance sheets before the close of the fiscal year for Japanese
corporations, on March 31. The result is that Japanese investors, who might
otherwise keep assets here to take advantage of the stronger dollar, are
joining the selling.

Several Bush administration officials said that they were without the main
weapon the Clinton administration used to contain the Asian economic crisis
three years ago: a booming American economy that soaked up imports and
provided liquidity to plunging markets in Asia.

The current troubles in Japan, which include the lack of huge government
spending to stimulate the economy, the inability of regulators to clean up
a banking system sinking in bad real estate loans and growing political
disarray, are quite different from the currency crisis in Southeast Asia
that began in 1997 and spread around the globe.

Nonetheless, it has been a long time since the United States and Japan,
which together account for roughly 40 percent of the world's gross domestic
product, were headed for zero growth at the same time. So an administration
that has yet to put its economic team fully in place is trying to assess
the risks to a world economy that cannot turn to a single engine of
economic growth.

Full article:

Louis Proyect
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