George,
You never know about those things. Only probabilities. I feel very strongly that psychology will change. No one thinks that way now because gold has been such a dog and crapped all over so many.
That can change in a heartbeat and it might look to be very imprudent to be selling gold. Especially when the defaults start.
Bill - The new story below is what I am talking about. The beat goes on.
Japan Prepares to Nationalize
Ailing Nippon Credit Bank
By ANDREW TORCHIA
Dow Jones Newswires
TOKYO -- The Japanese government prepared Saturday to nationalize debt-ridden Nippon Credit Bank in order to prevent a collapse that could shake the banking system.
The government formally advised Nippon Credit of its intention to begin nationalization procedures, and the bank will respond to the government by midday Sunday, Nippon Credit said in a statement. Prime Minister Keizo Obuchi has the power to order the bank nationalized if it doesn't accept the plan voluntarily.
Executives of Nippon Credit met to discuss the plan. According to sources in the bank, the meeting focused on ways to prevent the nationalization from damaging corporate and individual customers when business resumed on Monday. A Nippon Credit spokesman declined to say whether the bank would voluntarily accept nationalization.
Nippon Credit would be the second big Japanese bank to be nationalized in three months as Japan's financial crisis rips through corporate balance sheets. In October the government took over ailing Long-Term Credit Bank of Japan, the first nationalization of a Japanese bank since World War II.
The government plans to use public money to keep the nationalized banks operating and write off their bad debt while it seeks private sector buyers for the institutions' viable operations.
According to local media reports, a government inspection of the bank's books earlier this year found Nippon Credit was effectively insolvent and that it would be unable to regain financial health on its own.
Nippon Credit, established in 1957 to funnel funds to Japanese industry, had assets of more than 12 trillion yen ( $102 billion ) and more than 2,000 employees at the end of September. It forecast a parent pretax loss of 620 billion yen for the fiscal year through next March because of bad loan write-offs. Last month it disclosed about 3.2 trillion yen in bad or doubtful loans.
Over the past two years the bank has struggled through a string of attempts to restructure that have included its complete withdrawal from overseas operations, cuts in staff and salaries, and aid from the Bank of Japan and other commercial banks. It announced a broad alliance with Bankers Trust of the U.S. last year.
The final blow may have come on Wednesday when Chuo Trust & Banking Co. said it had decided against merging with Nippon Credit in its present form.
On Friday, Finance Minister Kiichi Miyazawa denied any knowledge of the plan to nationalize Nippon Credit, but said a framework under which the government may use up to 60 trillion yen to handle troubled banks, passed by parliament in October, would protect the financial system.
Nevertheless, analysts believe Nippon Credit is unlikely to be the last of Japan's big banks to fail to survive in its present form. At least one more major bank may have to be nationalized, while others may have to seek rescue mergers, said one securities company analyst.
Meanwhile, Nihon Keizai Shimbun Inc. said that Koa Fire & Marine Insurance Co. would replace Nippon Credit Bank in the Nikkei 500 stock index, effective Monday.
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