Worswick, I do not think that we will have 2 to 3 trillions flowing to our shores, but about a month ago, I did put forward the speculation that a "small" trickle of $200 billions annually will be sufficient to maintain a very bullish stand here. If the gates are opened and we get a flood of that money as you suggest, that will be the beginning of the end. In practice, I think that Japan is going to let the "Postal" diversify only very gradually and over time. I see a much more problematic situation within Japan, now that they have access to foreign based banking with stronger balance sheets than any of the Japanese banks. This will be mini runs on the domestic banks. The nature of the beast is that "mini-runs" grow to become major runs, and since the whole banking system is nothing but a confidence game (the double entendu s intentional <g>), once confidence is lost, the deposits fly out of the door, and the asset base shrink, causing, you guessed it, bank failures. I think Citidork (oops) is acting smartly by not disclosing the extent of new deposits they are garnering. If they did, the MOF would be all over them and a new move of isolation would develop there. Meaning, keep the foreigners out. The problem Citi is facing is that at this time, I am not sure they have the means to recirculate these deposits into the Japanese economy (borrowers are still organized within their own little or big clans (kuritzu or something like that, I never took eastern languages, or anything for that matter <g>). Hopefully, the Citi can recycle these locally with some of the biggies. If the Citi recycle these funds to the US bond market, it will not help the local economy, nor would it be as economically viable.
Zeev
Zeev |
