OKYO (AP) — The president of Japan Airlines said Thursday the money-losing carrier is applying for public funds to help turn around the company after it was pummeled by the downturn in global air travel, but it quickly received a reluctant response from the transport minister.

JAL President Haruka Nishimatsu said he told Land and Transport Minister Seiji Maehara that the airline is seeking emergency government aid under an industrial revitalization law that is intended to help struggling companies.

I often wondered what would happen to the economy if the government randomly sent some low and middle income people, selected at random from tax returns, checks to boost demand as soon as recessions can be identified. A huge amount of money creation, caused by sending everyone money to buy something big, would obviously cause massive inflation. That would be bad, but sending fewer people significant checks might boost demand enough to shorten the downturn.
They tried something like it here in the USA around the year 2001, when everyone got $300 or so. I remember thinking, “What the hell is going on?” Today, if the government gave everyone a little, like back then, they would probably just use the money to pay down debt, not much would happen to end the recession. But fewer, larger checks might go to buy some big items. That might increase demand enough to put people back to work without stoking inflation. People wouldn’t target specific items like happens with a “cash for whatever” program. So demand in particular industries wouldn’t fall off a cliff when the program ended as the economy recovered and the checks ended. Very few people would quit working and sit around waiting for a check, especially since they would (hopefully) only go out during recessions.
Wow! That was easy. I like my new economic model. Now I know how Karl Marx felt. You think my new system will turn out better than his? I’ll call it, “Random Capitalism for the Masses.” Maby this fiat paper money thing isn’t such a bad system after all, Peter. Watch them steal my idea. Then you’ll know that things are really bad.

Ed Note: was that not ‘cash for clunkers’?

Right on the mark, Peter.

Very interesting times we live in.

WOW! Some guy named Jim Richards of Omnis on CNBC TV just (25 Sept) laid out the U. S. Federal Reserve Bank’s secret plan to purposely devalue the US dollar by 50% in the next 14 years, so that the USA can deal with the $60 trillion of liabilities it will incur during that period. Richards said that they have determined that no feasible combination of growth and taxes can pay such a huge debt. But that the Fed has determined that a debt of about $30 billion could be managed. He pointed out that 4% inflation, over a period of 17 years, will cut the value of the dollar in half. He said that that the purpose of the Federal Reserve is to inflate the dollar so as to prop up the banks, and that the claim that they foster price stability is ‘nonsense.’ A 1913 (the year the Fed was created) dollar is worth 8 cents today. He said that the free market could see the plan being carried out and collapse the dollar. That is where the International Monetery Fund comes in. They have been anointed as the global central bank by the G-20. They are issuing debt for the first time. There is nothing behind this debt which he called called SDRs(special drawing rights?). It is just phantom money created out of thin air. The Fed wants to displace the dollar with IMF SDR money, so that they can devalue the dollar without having the global free market collapse it. He said that all this has to do with something called Triffin’s(sp?) dilemma of 1960. It states that in order to stimulate growth, some hard currency country has to run persistent large deficits, but if you do, you eventually go broke. Since the US has fueled the world economy for 50 years, it is now going broke. The US needs to get its’ house in order, but doing so without significant debt reduction, would wreck the world economy by causing too great a reduction in world trade. So the plan is to kick the problem upstairs by using SDR IMF money to fuel the world economy, while ‘we take the dollar off into the corner and trash it in order to solve our own debt problems.’ He said that Worsch(sp?) has told the other members of the G-20, that we sort of have to trash the dollar, but that we are going to do it gradually. Worsch said that if the market gets ahead of us, and you see gold go to $1500 or $2000, the Fed will rapidly raise interest rates in big chunks to stop too rapid a dollar decline. Richards said that the Fed should have started raising rates 6 months ago to help the dollar.
I guess we know who runs things now! I should charge for this stuff. Seriously, I told all my friends when this crisis started that the only way to prevent economic ruin caused by trying to pay back such a huge national debt, was to inflate it away. Looks like I was right for once! I hope someone puts the interview on YouTube. You think the folks in Washington might deny that they PLAN to give Americans 4% inflation for the next 14 years? It doesn’t sound like it will be a fun 14 years. Who knows how high they will have to raise interest rates to defend the dollar. Richards also said that the central banks hate gold, because it limits their ability to print money.

Ed Note: Bill, It constantly amazes me as people talk as though the US is the only country with a debt problem. What about Japan? The UK? Central Europe? Dubai? If this was just a US problem it could be solved in this fashion but this is a global issue. Also, do you really think this can be gently phased over 14 years? That is not the way markets work. There will be violent and sudden changes. But it is good to see that there is some realization of reality – but the world does not end at US borders and the dollar is the global currency.

THE TIMES today: Japan toppled back into the deadly economic trap of long-term deflation today and experts have warned the trend could blight the world’s second largest economy for at least another three years.

August consumer prices plummeted at a record rate of 2.4 per cent compared with a year earlier, adding momentum to a deflationary force that threatens to stifle economic recovery.

The drop, though broadly in line with analyst predictions, prompted several prominent analysts to issue dark predictions of worse to come.

The newly elected Democratic Party of Japan has stressed that its policy emphasis will be on boosting the household sector, though some believe that its efforts are tantamount to “stopping a rhino with a peashooter.”

“Japan is now the only serious developed country facing deflation and effectively you cannot see what will prevent this going on for a long time. We are saying three years, but it could very possibly be far more,” said Macquarie’s chief Japan economist Richard Jerram.

The acute drop in prices was foreseeable, said analysts, from consumer and retailer behaviour on the streets of Japan’s major cities. Desperate efforts to drum-up custom have seen stores offering generous deals on everything from high-end couture to the lowliest lunchtime sandwich. Even large corporations like Sony are unable to resist the downward pressure, cutting both its Playstation 3 and PSP console prices to spur demand.

Restaurants have slashed wine prices and many shops have stepped-up “rainy day” discounts that entice people through their doors when the weather is bad.

Wages have been falling in Japan for 14 straight months and data due tomorrow is likely to show that trend continuing through August.

With analysts now warning that Japan’s already record rates of unemployment will lurch closer to 6 per cent later this week, many see the prospect that Japan will enter the same fatal type of deflationary spiral that crushed the economy during the late 1990s.

That pattern emerges when Japanese consumers, who have remained strictly rational throughout nearly 20 years of economic ructions, decide to postpone purchases because they generally expect prices to fall over the long term.

“We’ll soon start to see that there isn’t enough domestic demand to push up wages,” Kyohei Morita, chief Japan economist at Barclays Capital told reporters.

“As households’ spending power falls, there’s concern that this deflation will lead to further deflation – in other words, that we’ll enter into a deflationary spiral.”

The Telegraph writes:

Yen strength is asphyxiating Japanese exporters and feeding a self-reinforcing spiral of lower prices and wages. This 1930s process increases the real burden of debts. Corporate debt alone is 180pc of GDP.

Junko Nishioka from RBS said a yen near ¥90 to dollar has broken through the “break-even rate” for manufacturers such as Toyota, Honda, and Sony. “Exporters face the possibility of exchange losses,” he said.

The crisis engulfing the world’s second economy is remarkable. Profits fell 53pc in the second quarter. Total cash earnings have dropped 7.1pc this year. Tax revenues have plunged 27pc. While the economy is no longer in recession, GDP has shrunk by 8pc from its peak and exports are down 36pc (in yen).