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To: David R who wrote (61423)	1/24/2001 10:52:59 PM
From: Box-By-The-Riviera™	Respond to of 436258

my friends think 10 years. but HB might say that the law of pyramids is taking over along with the rules of mark to market.... today's story regarding downgrades on four japanese banks regarding pay outs of dividends begs the question of earnings premised upon their equity holdings that now must be accounted for on some semblence of a mark to market basis..... all things considered in the law of numbers game when it comes to pyramids... i am seriously beginning to think both our friends are wrong and they are in for a surprise.... there's more but that's my two bits, though you didn't ask me. regards J

To: David R who wrote (61423)	1/25/2001 1:09:51 AM
From: Step1	Respond to of 436258

>> Please correct me if my understanding is inaccurate David, I just got off the phone with a friend of mine who is still active in the real estate market (mostly as an owner of commercial property though now) and the average mortgage on a house is 25 to 30 years. I dont think 60 year mortgages were ever available in Japan. I have heard of them in Switzerland though, and if a European CFZ lurker could prove or disprove that , i would appreciate. >> I am not sure that we could ever have a Japanese style problem. They have a huge number of bad loans, and nobody is willing to clear the books. I have had conversations with a friend who spent years in Japan. People have taken out 60 year notes on their homes that are now worth a fraction of the buying price.<< Correct on the bad loans. Mistaken on the 60 year mortgages i think and the jury is still out on whether the US could have a J style drawn out recession. We`ll know it once it`s happened for sure. Remember , never say never? Besides , how long did it take to pierce the 1000 pts barrier on the Dow? I would also venture that the bulk of the bad loans are not on private houses but rather on extravagant commercial developments, inefficient industries and real estate speculation. J towns and cities also have a phenomenal amount of debt on their own past ventures into the "3rd sector" i.e. partnerships with the service industry. There is no movement to date on this. >>As I understand it, to declare bankruptcy would be a personal disgrace that would likely be accompanied by suicide. << Often sadly so. >>So, the drastic action necessary to correct the problem is not an option. Were we to have this situation here, banks would be closed, businesses would fail, etc., and we would get on with life. It might make for a tough couple of years, but certainly never like Japan. << >>I have heard estimates that push recovery out as far as 20 years.<< The recession and its toll are on the front burner here (i live in Japan) daily, through all levels of every group , work , media etc... as it takes twisting and turning developments no one would have foreseen 10 years ago , even as far as 3 years ago. It is a slow grinding process to be sure. All sectors are affected and i really cant imagine what things would look like if it werent for 1- the US soaking up all those J products 2- the J gub`ment spending money like there is no tomorrow ( part of the problem and the solution at the same time) Regards Stephan .

To: David R who wrote (61423)	1/25/2001 10:38:52 AM
From: pater tenebrarum	Read Replies (9) \| Respond to of 436258

<<Were we to have this situation here, banks would be closed, businesses would fail, etc., and we would get on with life. >> this is where you err. one would EXPECT this to happen, but it won't. to wit: the Fed has printed $160 billion dollars in fresh money over the past six weeks alone, in an attempt to save the stock market and the fast deteriorating junk bond market. they will NOT allow a clearing out of the malinvestments, which is exactly what has happened in Japan. likewise, rest assured that politicians will re-discover interventionism in a big way if there's a more-than-average economic downturn. just look at California, there you have it. EIX and PCG have been defaulting on their commercial paper, and instead of bankruptcy, we get intervention by the state. in qu.3, US banks had bad loans amounting to over $100 billion on their books, and that was before the economy took a dive. i predict that this number will rise dramatically in coming months. and you really believe there won't be bail-outs? the leverage and derivatives pyramid has become so large, and so concentrated, that the failure of a single big institution could bring the entire system to its knees. we have passed the stage of the credit/asset bubble where this problem was still amenable - now it's either inflate further, or risk collapse. as an aside, shortly before the Japanese bubble peaked, Japan was universally regarded as invincible economically. their model was held up as one worthy of emulation around the world. and yet, it was a simple, classical credit bubble that was at the root of Japan's success, and the same holds true in the US.