Mortimer B. Zuckerman
LIAR-in-chief
The following article about Japan, written by
Mortimer B. Zuckerman, editor in chief of US News and World Report, is the classic example
of modern yellow journalism. It is this kind of intentionally misleading diatrabe
which misleads Americans by the millions. It is packed so full of LIES that they're
hard to count, but we did anyway, and came up with 17 of them!
It is also the world's largest gross and net international lender, with over $2.5
trillion outstanding–so that its financial troubles could disrupt global financial
markets.
This is LIE number one. There is no mechanism
by which troubles at home would disrupt the world's largest international lender and
"disrupt global financial markets". Why make such an intentionally
misleading statement?
A decade has passed since Japan's "bubble" economy burst.
In the past nine quarters, Japan's nominal GDP growth has exceeded zero only twice, and
the country is now into its second recession.
This is LIE numbers two and three. Their
economy never "burst". This is media disinformation being orchestrated to
conceal the reality of Japan's economic boom, which is that
it's GDP is up an astounding 52% since 1989 (from 2,885 trillion yen to 4,392 trillion in
2001). Why tell an outright LIE which is so easy to disprove?
Its stock market is now down 67 percent from 1990.
This is LIE number four, which is the most hideous
type of LIE, because it's based on an omission rather than a commission. Only 6% of
the average Japanese household's savings are in the stock market, so even if their stock
market completely crashed, the worst damage it could do to Japan's savings is
decrease it by 6% http://www.stat.go.jp/english/zuhyou/b1610000.xls
Urban land prices have fallen over 80 percent since their peak, with the greatest
percentage drop last year.
This is LIE number five, which is again a lie based
on omission rather than commission. The Japanese have no household debt because they
own their homes outright, which means that falling land prices do nothing but provide an
opportunity for non-homeowners to buy their own homes. It doesn't affect the average
family at all. http://www.stat.go.jp/english/156n.htm
The value of the currency has eroded.
This is LIE number six. The value of the yen
in 2000 averaged 110 yen/dollar which is up more than three fold since 1970 when it was
360 yen/dollar. It is the value of the DOLLAR which has eroded.
The collapse of national wealth is estimated to exceed $18 trillion, or almost four
times Japan's gross domestic product
The Japanese have lost so much confidence in the future that they are deferring
consumption and investment and instead are saving about 30 percent of household income,
compared with zero in the United States.
This is LIE numbers seven and eight. It is
publications like US News and World Report which have denied that the Japanese even have
much in the way of personal savings, and now they claim that it decreased by an amount
which is six times greater than the amount they previously claimed that Japan had in
total. The only effect this "economic collapse" has had on Japan's savings
is that it increased their already high savings rate and added more money than ever to
their Postal Savings Accounts (PSAs). PSAs have never been affected by year to
year economic fluctuations--the Japanese have saved 33% of GDP since at least WWII.
During this period, the United States added $22 trillion in private net worth alone.
This is LIE number nine. During this period,
the US had a *negative* personal savings rate for the
first time since the Great Depression, making it the only industrialized nation in the
world without a positive savings rate.
The book net worth of Japanese companies is 6.5 times their market value
This is LIE number ten, which is another LIE by
omission rather than commission. This has not changed AT ALL in the last 50
years. This has always been the case with the average Japanese company.
the net worth of households has declined by at least a third below their cumulative
actual savings
This is LIE number eleven because it's a ridiculous
statement.
This asset collapse has virtually bankrupted the Japanese financial system and
suppressed aggregate demand.
Too scared to spend.
This is LIE numbers twelve and thirteen.
Japan's average living expenditures per household in 2000 were 340,977 yen per month,
which represents annual consumer spending per household of $37,197 per year http://www.stat.go.jp/english/156n.htm which is higher than the TOTAL mean US household
income before taxes of $37,005--US Statistical Abstract, 2000, Table No. 739.
Japan has failed over an entire decade to restore self-sustaining economic growth.
This is LIE number fourteen. The US economy
grew by only 35% between 1989 and 1999 which makes Japan's 52% growth in GDP very
attractive. It is a LIE to claim that such a growth rate is not
"self-sustaining economic growth" http://www.bea.doc.gov/bea/dn/st-tabs.htm
Large companies are so deeply indebted that it is estimated even a 1 percent rise in
interest rates would make it impossible for almost half of them to keep their loans
current.
The central bank has lowered interest rates to 0.15 of 1 percent, compared with 5.5
percent in the United States
This is LIE numbers fifteen and sixteen.
During most of the last 5 decades the interest rate on savings accounts in Japan has
actually been in the negative, and it's never exceeded 1%, so the odds of a 1% increase in
interest rates are zero.
In a matter of weeks, a run could wreck the financial system and produce an economic
collapse of the kind not seen since the Great Depression
This is LIE number seventeen because this is just
not going to happen, no matter how much gloom and doom Japan-bashers spew forth. The most
likely scenario is that the yen will increase in value from 120 yen/dollar to 80
yen/dollar, which would be an instant 50% increase in Japan's already astronomical family
incomes and give Japan, a country with half as many people as the US, a bigger GDP than
us.
All LYING jews, exit stage left.
Editorial 3/19/01
By Mortimer B. Zuckerman editor-in-chief
Japan on the brink
Weather forecasters may have sounded a false alarm for much of the East Coast last week,
but economists have harder evidence that an economic tsunami is bearing down on Japan. A
financial disaster of the size implicit in their latest numbers would send huge waves
everywhere. Japan is the largest economy in Asia. The spending power of its 127 million
residents exceeds that of the 1.8 billion inhabitants of East and Southeast Asia. It is
also the world's largest gross and net international lender, with over $2.5 trillion
outstanding–so that its financial troubles could disrupt global financial markets.
A decade has passed since Japan's "bubble" economy burst. Its stock market is
now down 67 percent from 1990. Urban land prices have fallen over 80 percent since their
peak, with the greatest percentage drop last year. The value of the currency has eroded.
The collapse of national wealth is estimated to exceed $18 trillion, or almost four times
Japan's gross domestic product. During this period, the United States added $22 trillion
in private net worth alone.
The book net worth of Japanese companies is 6.5 times their market value; the net worth of
households has declined by at least a third below their cumulative actual savings. This
asset collapse has virtually bankrupted the Japanese financial system and suppressed
aggregate demand. Japan has failed over an entire decade to restore self-sustaining
economic growth. In the past nine quarters, Japan's nominal GDP growth has exceeded zero
only twice, and the country is now into its second recession.
Too scared to spend. Virtually all the economic indicators are grim. Output, prices, jobs,
profits, incomes, business investments, consumption, and tax revenue are falling. Budget
deficits are soaring. Deflation is accelerating. Higher oil prices and a shrinking U.S.
economy are limiting net export revenue, which has been the growth engine that has pushed
Japan out of past recessions. The Japanese have lost so much confidence in the future that
they are deferring consumption and investment and instead are saving about 30 percent of
household income, compared with zero in the United States.
Bankruptcies have soared, piling new losses on lenders faster than they can write off old
ones. In the past decade, banks have written off almost twice their entire capital and
reserves. Bad loans are generally thought to be 50 percent worse than the stated figures,
since banks have overstated the collateral they have on loans, forgiven debt, or provided
credit to keep deadbeat companies going rather than confront their bankruptcies.
Unsurprisingly, the credit ratings of the banks are suspect. They have to pay a risk
premium that translates into higher interest rates, which is tantamount to tightening
monetary policy–exactly what they don't need. Large companies are so deeply indebted
that it is estimated even a 1 percent rise in interest rates would make it impossible for
almost half of them to keep their loans current. Domestic bank lending has dropped to a
nine-year low. The banks hoped that a buoyant economy and a rising stock market would save
them, since they are huge equity holders. Now share prices are tumbling with the risk that
banks will unload equity, accelerating the fall in stock prices.
The government is trying to help. The central bank has lowered interest rates to 0.15 of 1
percent, compared with 5.5 percent in the United States. Hundreds of billions of
pump-priming dollars in taxpayer money have been poured into public works, generating an
annual debt of 7 percent of GDP. Now Japan's national and regional debt total about 140
percent of the nation's GDP, a ratio higher than any other industrial nation has ever had
to deal with. Just servicing debt consumes about two thirds of the central government's
tax revenue. So with zero nominal interest rates and massive budget deficits, the
government is largely out of policy bullets. Japan faces a loss of confidence by domestic
and foreign investors, who are bailing out of yen-denominated assets while they can. The
lack of confidence in the ability of policymakers to turn things around creates the risk
that any piece of bad news might panic the bond, stock, or currency markets. In a matter
of weeks, a run could wreck the financial system and produce an economic collapse of the
kind not seen since the Great Depression.
Who would have imagined a decade ago that Japan would be in such a mess? The metaphor
Japan expert David L. Asher of the American Enterprise Institute chose a year ago was that
the country risked a financial Mount Fuji eruption. The world can hear the rumblings.
