From Yahoo today..."When trading began Wednesday, Japan's 225-issue Nikkei Stock Average moved higher bit closed off 157.95 points, or 1.07 percent, at 14,755.54, because of new concerns about a major part of Asia's economic crisis -- the weakness of Japanese banks ridden with bad loans.
As Japan's political parties continue to wrangle over a proposed bailout for the banks, rumors surfaced on the market that Fuji Bank Ltd. was facing huge derivatives losses overseas. That triggered selling in the banking sector, traders said, even though the bank later called the rumors "totally groundless."
Ref your article.."said the bank's notional amount of derivatives transactions totalled 418 trillion yen as of the end of March. This
included both capital calculated according to the standard set by the Bank for International Settlements (BIS) and that not so
calculated.
The derivatives contracts outside the BIS standard include those in the interest futures market and foreign exchange contracts
whose terms are shorter than 14 days".
As Peter remarked in a post some days ago, "How does the international financial system absorb a $350B (50 trillion yen) LTCB implosion? This isn't, "we're insolvent, our debts are 120% of our capital, sorry", this is a "we're involvent, our debts are 1000% (2000%?) of our capital, and x% of our assets" kind of deal".
I read 50 trillion yen as $725 billion @ 145 yen per dollar when I posted the first querry on this foruum, I realize the rate has dropped.
Now....IF THIS ACCURATE FUJI BANK HAS 8 TIMES MORE DERIVATIVE EXPOSURE THAN THE LONG TERM CREDIT BANK? THIS IS AN AMOUNT EQUAL TO HALF THE US GROSS NATIONAL PRODUCT, OR THE WHOLE US GNP DEPENDING UPON PETER'S TAKE OR MINE. (eg.$725 BILLION/OR $350 BILLION)
THIS DERIVATIVE EXPOSURE IS FAR, FAR BEYOND THE NEW YORK FEDERAL RESERVE ESTIMATES OF OUTSTANDING DERIVATIVE EXPOURSE IN THE WORLD FINANCIAL SYSTEM OF $87 TRILLON.
Are we really reading this??
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