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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: gumnam who wrote (35736)	7/4/2003 9:17:37 PM
From: TobagoJack	Respond to of 74559

Hello Gumnam, <<It is extremely unlikely that Japan Cen Bank will let the debt situation get out of hand>> … Yup, I agree with your voice of reason, and believe BoJ will try their best :0) to forestall, delay, waylay, prevent a debt blowup, even if they themselves have to buy every piece of JGB paper. << - but if they screw up these JGB yields keep going higher, we are looking at certain disaster in US>> … or, easier, there only needs to be pervasive, even if momentary, fear that JGB will go higher, setting off the unwinding, and retreat, leading to … oh, you know, volatility, chaos, screaming and rational reallocation and irrational panic. Matters seem to reach for chaos in exactly this manner, each and every terrible time. <<Japanese Institutions do not cut losses. When faced with a loss in one asset, they will as a matter of habit, culture and what not, cut their exposure to something else>> … This is very true. They seem to habitually throw out the baby with the bathwater, along with the bathtub. We must stand ready to pickup the baby, or the bathtub, and avoid being splashed with bathwater:0) I do not know that the unwinding will necessarily lead to repatriation of funds back to Japan, as opposed to going into some other soon to blowup asset class. The Japanese are very good at picking the tops of markets :0) <<Life is tough but owning gold will be fun>> … small joys of life, we must count them today, and may we count them tomorrow, again and once more :0) Enjoy your holiday! Chugs, Jay

To: gumnam who wrote (35736)	7/4/2003 11:41:46 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Gumnam, <<JGB>> I am just back from swimming, before going back to swim again. Another thought is that I forgot that each action will lead to a reaction, et cetera, and in the two 'unrelated' cases of (a) JGB sinking / Japan credit withdrawn, and (b) California sinking / credit to states withdrawn ... what will the FED's most likely reaction be? Let me think for a very short moment, without great effort, and certainly without any originality nor imagination ... CUT RATES by 100 basis pts! BUY STATE BONDS ! BUY JAPANESE BONDS ! Surely, in the case of above (a) and (b), 100 basis points is not too much to burn, as compared to LTCM, Mexico Crisis, Russian Collapse, and Asian Financial Storm? Perhaps this is not the best time to do a refi after all, and that moment is still in our future;0) Just remember, in the event of currency collapse due to monetary inflation, stock prices supposedly rise, though not against gold, and interest rate rises, but not as fast as currency loses value. Let us watch to see if true when simultaneously applied to the largest and second largest economies, and the largest debtor together with the largest creditor :0) Chugs, Jay