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To: Perspective who wrote (44382)	12/6/2000 10:51:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

you definitely have Yen distortion there. when the Japanese stock market bubble burst, the Yen continued to soar. imo it was the real estate bubble bursting (that began with an approximately one-year delay vs. the stock market) that did the most damage to their economy. lending did dry up when prices for real estate started falling. in the final years of the bubble completely hare-brained developments were financed by the banks, as there was a strong belief that real estate values were a one way street in Japan (every argument, down to Japan's lack of space - it is a relatively small geographical area after all - was used to justify absolutely crazy prices). when these began to falter along with stocks, the banks were hit with a double, no, triple whammy: 1. since a portion of their equity capital consisted of their stock holdings, their capital-to-asset ratios plunged to dangerously low levels. 2. the sudden collapse in RE prices and demand suddenly led to a huge proportion of their loan books acquiring dud status. 3. the soaring Yen led to losses on their foreign bond holdings. since the banks didn't want to admit to the size of their dud loans, they did the next best thing to keep the situation from worsening even more: they stopped lending. at the same time, big sickly customers that were all but insolvent, were kept alive with regular infusions, just so that the banks could escape having to declare their debts to be duds, i.e. what money they made available went to the most undeserving recipients. that's it in a nutshell...note btw. that before the '90 collapse, Japanese banks were the envy of the world...they were the biggest players, and were considered invulnerable and invincible.