Henry,
I have followed this thread for some time, and I have always admired your knowledge, willingness to share ... and would appreciate your opinion as to what's going on in Japan.
Back in April you made this comment:
<I have to give a disclaimer first. I have equity stakes in large cap banks and insurers. I also have an equity interest in a non public internet broker that is considering going public. So I have a personal interest in both sectors staying strong.>
Have you feelings changed in light of whats occuring with the Japanese FSA (Financial Services Administration) investigation into Credit Swiss First Boston.
<A little known clause in the banking act states that the holder of the license will not engage in subversion, riots or otherwise treasonous attempts to disrupt the Japanese government. The interpretation of derivative trades that "postpone losses" (son saki oukuri sohen) was determined as a subversive act against the integrity of the Japanese financial system in a manner that resulted in a distortion of the events.
The Ministry of Finance (MOF), to which the FSA belongs, does not have authority over industrial corporations. They do have legal authority over the banking and securities system.
Industrial clients of CSFB who may have used derivatives for clever accounting schemes in Japan, are not the target of the FSA. What has just emerged in Japan is that the bank is liable for something that a Japanese client might have done. However, the interpretation may actually refer to the counter-party deals involving Long Term Credit Bank and Nippon Credit Bank that required the government bailout.
In this sense, by being the counter-party to a bank that was engaged in derivative losses which in turn were not marked to the market, a western bank appears to have engaged in a treasonous act against the Japanese government.
pei-intl.com
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Here's some other discussion on the above:
Message 10586106
RE-PRINT OF POST FOLLOWS ...
"Not to pour more gasoline on the fire, but I read this and almost panicked on the spot (I haven't seen you all mention it yet):
pei-intl.com
Posted MB, and here was his response:
Message 10580226
I also talked to several good friends who are derivatives traders, and this issue is VERY, VERY real. No real mainstream press coverage for obvious reasons, but you will see lots of Western financial institutions quietly flee Japan if CSFB gets whacked. Just another land mine out there."
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What's your opinion on the above?
Thanks,
Cheryl |
