From the AWSJ - 8 Dec 97.
"Japanese Act to Dispel Report of U.S. Bond Sales
By JATHON SAPSFORD - Staff Reporter of THE WALL STREET JOURNAL
TOKYO -- Finance Ministry officials moved quickly to throw cold water on reports that Japan's ruling party may recommend selling some government holdings of U.S. Treasury bonds to help Japanese banks that are having trouble obtaining dollars.
A ministry official said such sales, though conceivable, would only be conducted through repurchase agreements, under which the central bank would buy back the securities at a preset date. Such a measure, while temporarily providing Japanese banks with a fresh source of dollars, wouldn't increase the long-term supply of U.S. Treasuries on the open market.
The proceeds from repurchase agreements could "theoretically" be deposited at Japanese banks, a ministry official said, to help them meet the seasonal, year-end demand for funds. But ministry officials noted that no firm plans have been set at this point."
If the Japanese do go ahead and sell their US holdings, then you can expect a major correction on Wall Street! The 554 pts drop on Oct 20 would look insignificant in comparison. The Japanese institutions hold about US$281b while the Japanese government holds about US$100b.
I just hope that CREAF runs up fast enough for us to reach our targets and bail out! At this point in time, I don't mind holding on to my CREAF position until I get my target of S$52, which is definitely within reach, but I am very cautious about adding to my position.
Happy investing but be careful! |
