Joseph:
A loss of $300 billion will wipe out the equities of about 4 largest investment banks in the planet. This amount does not seem large (and you are right) compared to the assets of these institutions or to the trading activity. But, closing down 4 large investment banks will be catastrophic because, regulators will have to liquidate their assets (which may be a trillion dollars) of these institutions.
The closing Yamaichi has very little equity if any. But, a mere closing of a large investment bank is of concern to many around the world because its assets will have to be liquidated. In this case, its assets are around $25 billion, which is not much. But a loss of $300 billion dollars in investment banking equity will be a disaster.
Even a modest loss of $50 bil in investment banks' equity on a day (due to a 5% drop in prices) can have a huge impact on the stock markets, IMO; not because the amount $50 bil is large (it is not?), but because of the assets of the bankrupt institutions that will have to be liquidated.
Sankar
Saturday November 22, 4:40 pm Eastern Time
Japan's Yamaichi sees no way out, poised to shut
By Brian Williams
TOKYO, Nov 23 (Reuters) - Japan's oldest brokerage, Yamaichi Securities Co Ltd (8602.T), was poised on Sunday to shut its doors after a last-ditch review convinced the company there was no chance of survival, Japanese media and financial sources said.
The biggest international concern was that Japanese banks could be driven to cut their U.S. Treasury holdings to raise liquidity, an action that would have global repercussions. |
