Found this on another board. SCARY!!!!!!!!!!
Posts in the past 24 hours from a man who works as a consultant to a Japanese bank on what's happening there, and why the market was up last night.
beemerstaclub.com
beemerstaclub.com
Posted by Beemer (152.163.206.183) on March 14, 2001 at 20:29:45:
The US corporate stocks are principally owned by investors but Japanese stocks are owned by 17% domestic investors, 18% foreign investors, and 15% institutional investors and 50% by corporations. Of this 50%, 2/3 is owned by banks. Banks own 35% of total stocks outstanding in cross holding with their customers. When G7 countries instituted the 8% risk asset ratio for banks in order to compete internationally (became effective in 1993), Japanese banks were given a special allowance for their stock holdings. When Japanese stock market was up in 1989, banks counted 45% of the paper profit on these stocks as part of their capital. That amount reached $50 bil in 1989. They are able to lend 12.5 time of this amount while maintaining 8% risk asset ratio. So, they made billion and billions of dollars of loans to finance many shady deals. In 1990, most of those loans turned bad. Not only were they not able to collect the loans back, because of the 60% drop in stock prices, their capital base dropped and the risk asset ratio is now below 8% line.
What this all means is; Japanese financial system is tied to the stock market and if the stock market falls, banks can lose all of their capital base and become insolvent. I have been suggesting that the government prohibit the banks to own corporate stocks but they have turned deaf ears and the government is considering setting up a public stock purchasing fund which will be guaranteed by the government. In other word, the Japanese government is getting ready to buy stocks to stop the market fall! I knew they would do this eventually. This is a direct government intervention that diamentrically opposes free market principle. If they do this, Japanese economy will collapse and the world depression will ensue. Can you imagine, the second largest economy in the world evaporating from the surface of this planet? That's is what's going to happen. Think about it. If what they are trying to do is acceptable, why don't the US government or the Fed buy the tech stocks and suppport the NAZ at 3000? They can print as much money as it takes. There are things you can do and you cannot do. What they are trying to do is to destroy the market system of the world economy. This is absolutely unacceptable. I hope Greenspan stop them. I hope someone puts some sense into the dead brains of those old Japanese politicians. |
