Will Easier Money In Japan Come Just In Time For Bush?

The prospect of interest-rate cuts abroad over the coming year spells good news for the Bush Administration, contends economist David Hale of Kemper Financial Services Inc. In particular, he notes that the Japanese stock market crash of 1990-91 and related problems in the banking system erupted at a fortuitous time for the Republicans, since they forced the Japanese to tighten money in the middle rather than at the end of the U.S. Presidential term.

Japan's central bank, he says, has now successfully slowed the economy and broken the back of the speculative surge in stock and land values that destabilized the Tokyo stock market. Thus, suggests Hale, "Japan will be in a position to lower interest rates significantly during the runup to the 1992 Presidential election in the U.S."--a policy that should bolster U.S. economic growth.

Japanese monetary policy has worked to the advantage of the White House before. In 1987 and 1988, Hale notes, "Japan kept interest rates artificially low to help stabilize the dollar and lessen the risk of a recessionary hard landing in the U.S."

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