I2. First the marking to market. Supposedly, financial insitutions are holding big chunks of real estate on their books at cost which is under the current market price. Marking to market will add assets to their books hopefully bringing the banks closer to the 4% required. The problem with that is that unless an actual real estate transaction has occurred, who determines the real value of this real estate?
As for the the Nikkei having tested 14,000, yes, in principle you are right, but in practice, if such a tripple bottom is breached, all hell will break loose. I think the LPD has been watching charts for too long and has made a concerted effort to defend 14,000. When government intervene to "defend" magino lines in the market, they almost always fail. They have pulled all the stops (the artificial stops) in that effort, including lip service tax cuts, forcing savers in Japan to become stock holders in the failing banks of Japan and now the accounting smoke and mirror tactics of revaluing the real estate.
Unfoortunately, Japanese banks have about 13 trillion yen exposure to the rim countries, and if some 20% of these need to be written off, the new artificial infusion of 4 to 6 trillion in real estate revaluation will not be enough (they still have on their books oodle of overvalued real estate loans which are not performing).
Zeev |
