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Technology Stocks : Cymer (CYMI)
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To: pat mudge who wrote (18325)7/2/1998 1:32:00 AM
From: Elroy Jetson  Read Replies (3) of 25960
 
I graduated from UC Berkeley in Econonics for whatever that's worth. In my opinion, protecting the shareholders of failed banks is not the way we handled our "Resolution Trust Corp" but it will work well enough, and is probably more appropriate to their economy.

Japan is different because of their interlocking shareholdings. Wiping out shareholders equity in one bank would likely imperil the balance sheet of other banks or insurance companies who are major shareholders.

As in the US, the taxpayer must finance the bailout - but more completely in this case. Japan is a very wealthy country which can easily afford to bail out their banks. Until now they have chosen to maintain the fiction that this was not necessary.

As in the US, re-liquifying their banks will provide the basis for a sound recovery. Some will complain that this solution does not spoon out enough "market discipline" to prevent an re-occurance - but Japan is a different country and they are entitled to their own solutions.
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