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The Japanese, who could apparently do no wrong for so many years, now cannot seem to do anything right. They have not yet grasped the point that government intervention in financial markets, big increases in government spending, and restrictive practices on imports are no longer the road to success. The paradigm that the Japanese are following, while it may have been appropriate in the 1930s or the 1960s, no longer works.
The Japanese have tried no less than seven fiscal stimulatory budgets in the last five years. None of them has worked, yet they can't understand why the eighth try at stimulus-the details of which are still being announced-does not engender more enthusiasm.
With the Japanese economy quickly heading for disaster, it is no surprise that the sharks are circling. But will the new economic plan be successful?
The answer is by no means a foregone conclusion. After all, Japan isn't Thailand or Indonesia. The country currently has more than $200 billion in foreign-exchange reserves, far bigger than any other country. However, large numbers...