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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Sweet Ol who wrote (40832)	3/25/2005 9:44:25 PM
From: kodiak_bull	Respond to of 206220

John, I've had some responses via p.m. to the article, so I thought I'd reprint my original response (and I might edit it a little bit) for the group here: <<It is a good article. Something similar happened to Japan after years of faking their banking system. They're 15 years into solving the problem (insolvent banks with fake balance sheets, just shells of non-performing loans). Korea in the 70s and 80s also cooked their banks and the whole banking system. They guaranteed low interest loans to the 6-8 biggest chaebols, and everybody else in the country was borrowing at the kerb market rate of up to 365% per year (sometimes higher, these guys made the mafia look like Ditech.com). All the foreign banks had to go along with it or lose their permission to lend in Korea. As a result Hyundai, Samsung, Daewoo etc. all were subsidized businesses and all other companies were strangled. In 1997 with the monetary crisis crony capitalism came under fire and they've been trying to fix it ever since. No end in site, but it doesn't appear to be as grave a situation as Japan's. Now we have another version of this, sort of an update from the Eastern European model of 1945-1990: you pretend to work, we pretend to pay you. Only now in China it's we pretend to be a bank and you pretend to be a borrower. The Chinese psychology is, in my experience, the most practical of Japan, Korea and China, and I think they are the most likely to come out of it more quickly. The Japanese are, by culture, the most likely to stubbornly "buy into" their own, specialized "Japanese" system on many things and they have proved this throughout history, whether it was closing Japan to outsiders until the 1850s, going whole hog into a Japanese version of modernization in the Meiji era, staying with the Greater East Asia Co-Prosperity idea until it took Hiroshima and Nagasaki to shake them out of it, or standing behind a house-of-cards banking/industrial system hoping it would right itself; so far 1990 to 2005 isn't looking too good. The Chinese bank managers siphoning off funds is, strangely enough, a good sign. When someone, ANYONE, acts to preserve capital rather than continue lending it to fake borrowers, that has to be good. Kb