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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (1724)	6/7/1999 5:41:00 PM
From: X Y Zebra	Read Replies (2) \| Respond to of 3536

Thanks for the article Chip... Japanese life insurers are saddled with a persistent negative spread -- the gap between the returns on their investments, which remain low as domestic interest rates hover near zero, and the payments they have promised to policyholders, which were set at relatively generous levels during the heady days of inflated asset prices a decade ago. I wonder if they understand that prolonging such condition, will in the end be worse for all involved.... I am not familiar with the specific regulations and limitations of insurers being able to invest a large portion of their assets in foreign markets, namely the US and others, to get more reasonable returns.... but the above leads me to think that the longer they attempt to "slowly and orderly clean-up", rather than a "shocking hosing down" will simply continue to make the US dollar as strong as ever, since investing in US assets would be a more logical strategy in other to avoid such negative returns..... Which in the end, it will only guarantee the final disaster anyway... To add to such thought, what would be the motivation of a reasonable investor (local or foreign), to send funds to the Japanese market, when they are overshadowed with such pending disasters.... Then again, it is easier to "watch the bulls from the barrier", than face them head on.... (by bull I mean the ones that matadors face in a "corrida"... rather than the market type). Insurers have also been hit hard by government deregulation, which facilitated the entry of new and nimbler rivals. Pension fund management, once the exclusive territory of life insurers and trust banks, is now up for grabs. Well... I guess that is a start... the questions are, is that enough..? why are they taking so long ?... mere tradition?... in the face of disaster ? The recent launch of inspections by the FSA into the health of insurers is expected to put further pressure on weaker players to either draft realistic survival plans or close down, analysts said. Hmm... it sounds that slowly, they seem to be "getting it" The Tokyo stock market showed only a muted reaction to media reports at mid-afternoon about the FSA move, which was only the second failure of a major life insurer in the post-war era. Nissan Mutual Life Insurance Co was ordered to halt operations in 1997. Is this a sign that the market has already discounted the worst case scenario, and they are actually begin to improve based on better expectations, from this point on.... ...Or, simply they are numb to the clear reality... I would tend to side on the first option... but then again... is the potential risk commensurate with whatever reward?... and the time involved... Hmmm, given these news, I may change to option # 2. As you say, another brick... off the barrier wall... the questions are, how soon ? and how far ? I am not very familiar with the history of the US Depression in terms of why did it last so long..... therefore: 1. Did the US government acted in a similar way after the crash of 29, that in stead of solving the problem, they made it even worse and long lasting as it did? 2. Which book would be the best to get that would offer an "inside story" of what made such event last for so long? I wonder if an earlier repeal of the prohibition laws could have prevented the initial years of the depression.... <g> (and by consequence, the rest of it.....) At least it would have been easier to ride the initial slide.... <g> Either way... it seems to me that there is clear proof everywhere for the Japanese Supremos to open up, and embrace true free markets.... indeed, I believe that they would be some of the bigger beneficiaries of such reform... But I guess that would play against the "niche" the Oriental Mysticism has created for themselves... Do you think Labor Unions (world-wide), speak Japanese? How do you say, "You can't have your cake and eat it too, in Japanese?"