Hello today. Wow. Vietnam.
One of my best friends just came back, rather she was scraped out of a Bankok hospital by one of her kids, after getting cerebral malaria in Vietnam. Very lucky to be alive.
An interesting article on Japan
(C)Jeffrey Herbener
"From 1985-1990, the largest six banks in Japan made $215 billion worth of real-estate loans. In the six major Japanese cities, commercial real-estate values have fallen 75% since the bubble burst in 1991. Risky Japanese loans were not confined to real estate. Recently, Moody's Investors Service Inc. downgraded Toyota Motor Corp. debt from triple-A to double-A-1, leaving only nine Japanese companies with the triple-A rating and five of these are being reviewed for downgrading. Mitsubishi Electric Corp., Hitachi Ltd., Nissan Motors Co., and Mitsubishi Motor Co. all recently had their debt downgraded. Moody's is even considering downgrading Japan's triple-A, sovereign-debt rating.
As late as 1993, Japan had the largest eight banks in the world, ranked by assets. Now, Japanese banks have the same share of the world market as they did in the early 1980s. In 1987, bank stock shares constituted 30% of all listed stock in Japan. Japanese banks currently make up only 12% of Japanese equity. One of the largest twenty banks in Japan and the world's 67th largest in 1993, Hokkaido Takushoku Bank Ltd., failed last November. Long-Term Credit Bank, ranked 14th largest in the world in 1993, recently had its debt rating reduced by Moody's. Sumitomo Trust & Banking, number 16 in 1993, is balking at a merger with Long-Term Credit Bank because of the Long-Term's bad debt. Sakura Bank, number 5 in 1993, is now trading a price-to-book value of 0.81, that is, investors think the bank is worth less than the value of its assets. Bad-loan write-offs have forced Sakura to plead for $2 billion in cash from its major shareholders to restore its assets and rebuild its net worth. Several other giant banks have seen their stock prices sink in recent months.
Japanese banks now suffer from carrying, by private estimates, over $1 trillion in bad debt, $600 billion of which is officially admitted. The largest six banks hold $131 billion in bad debt. And according to Japan's Financial Supervisory Agency over one-tenth of all good debt has higher than normal risk of default. $256 billion of this high-risk good-debt is held by Japan's 19 largest banks. For 1997, Japan's top banks made 0.24% return on portfolio assets, making them the least profitable banks of any developed area. In the U.S., banks' return was more than five times greater at 1.33%.
The Japanese debacle has been repeated around the world. Allowing for the unique circumstances that will make the situation play out differently in each country, central banks and fractional-reserve banking systems have flooded their countries with money and credit. The result is a world-wide financial crisis and bust.
And a bit more....
When the Bank of Japan increased bank reserves in an effort to reinflate, banks, already burdened with loads of bad debt of domestic consumers and entrepreneurs, took the additional reserves and lent them to businesses in Asia, especially South Korea, exacerbating the boom there. The Bank of Japan's reinflation policy has piled foreign bad debt upon domestic bad debt and led to the devaluation of the yen. Banks have responded by further retrenchment; they make fewer loans at home and abroad. In the first quarter of 1998, their overseas lending fell by $244.3 billion.
members.aol.com
I do feel that maybe there isn't enought Elmer's glue left.
Best to you,
Clark |
