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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 145.06-1.6%2:01 PM EST
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To: Jess Beltz who wrote (5014)3/19/1998 3:31:00 PM
From: Thomas DeGagne  Read Replies (1) of 10921
 
Excellent post Jess. I have read many of your previous posts but this one had the most "meat" in it.

>By contrast, in Japan, the problems are across the entire banking >sector. There will be no domestic Resolution Trust type cure for the >problem without the participation of foreign (particularly American) >banks, because there are not enough healthy banks left in Japan.

I would agree that the Japanese government is unlikely to close down and liquidate the assets of most financial institutions in the country. It would be a Tsunami(?) for asset values in Japan and result in a vicious circle of credit contraction.

I believe it is more likely that Japan will slowly shut down the worst performing banks. This should allow a more orderly transfer of performing assets to stronger institutions and improve their balance sheets. Survival of the fittest and biggest banks. This process has already begun with the closure of several banks and the Yamaguchi(?) brokerage last year.

What is your opinion of this scenario?

PS: Have you read The Alchemy of Finance by George Soros? It has an interesting discussion and theory on credit expansion and contraction cycles.
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