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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: Joseph G. who wrote (5810)9/12/1998 10:10:00 AM
From: Defrocked  Read Replies (1) of 86076
 
I don't have access to numbers this AM, Joe. But
as usual you got me thinking (dangerous as that
can be<g>).

For much of the last year, many senior execs. of
Japanese corps. and the general public have purportedly kept savings outside the Japanese banking system, with some going to postal
savings(guaranteed by govt.) and most going outside
Japan for safety and yen-carry spread. (Its one of the reasons
analysts use the L-measure of money in Japan to capture growth
since it encapsulates the postal savings system in addition
to bank deposits. Note: anemic 3% annual growth still.) The
disintermediation of the banking system to postal savings and
foreign investments is commonplace and sensible giving the
banking outlook and lack of transparency.

Many FX traders have been puzzled, and quite a few hurt,
by the rapid drop in $ against yen during last few weeks.
These guys argue that depression scenario vs. US mild growth
should point to $ strengthening which should more than
offset rate diffs, since Japan has lowered and US only
an expectation, and that relative political scenarios of
Clinton troubles vis-s-vis LDP offset one another.

Time will tell if they're right. But under the surface, its
possible that a huge repatriation of capital by the Japanese
govt. using the bond rally to dump US securities has been
occurring. This would make sense if the Japanese are finally
building a yen war chest to refloat a number of their banks.
Reserve data should reveal those changes in bonds to cash, if
any, over the next few reporting periods.
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