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To: IngotWeTrust who wrote (8)	11/16/1997 1:34:00 PM
From: IngotWeTrust	Read Replies (3) \| Respond to of 1756

Hi, Ken, welcome to this little corner of SI Goldbug Heaven(g) Mr. Retired Banker/Analyst wrote me (Nov 4, 1997) OPEN QUOTES: Japan's life-insurance industry reportably holds 25% of the $12 trillion equivalent US Dollars in Japanese household savings. As highlighted by the failure of Nissan Mutual Life Insurance Co., this industry is also in need of a life line. When Nissan Mutual collapsed, liabilities exceeded assets to such a degree that the industry's entire 200 billion yen emergency reserve covered only 2/3 of the loss. This is on top of the approximately 70% decline in value of their real estate portfolio holdings since 1990 real estate boom ended. These companies have promised returns as much as 5.5% while earning only 2.9% on investments in 1996. For 1997, with bond interest rates decreasing and the stock market declining, returns on investment will likely fall below 1996 levels. >>>According to Standard & Poors, the level at which hidden profits on stock holdings disappear are as follows: >>>Company Nikkei Dow Nikkei 19,000 >>>Toho Life...............19,327 >>>Kyoei Life..............19,006 Nikkei 18,000 >>>Nippon Dantai...........18,835 Nikkei 17,000 >>>Chiyoda Life............17,876 >>>Sumitomo Life...........17,485 >>>Mitsui Life.............17,167 Nikkei 14,000 >>>Dai-lchi Life...........14,949 Nikkei 13,000 >>>Meiji Life..............13,181 Nikkei 12,000 >>>Nippon Life.............12,894 Nikkei 9,000 >>>Taiyo Life...............9,757 >>> >>>Despite near invisible interest rates and huge fiscal stimulus programs, the Japanese economy continues to implode, contracting at a rate exceeding 11% in the last reported quarter. Problems will only increase with the financial turmoil in South East Asia where 44% of Japanese exports go. >>>The question that no one dares ask is: *What does the Japanese government do?* >>>The economy is imploding, government direct and indirect debt is 150% of their GDP, the government budget deficit is large and unsustainable, and the banks and life insurance companies appear to be insolvent and will need substantial capital infusions to remain viable. The answer is: Japanese government cannot repay present loans and borrowing additional funds to bail out banks & insurance companies will only speed the road to bankruptcy. The banks are large holders of government debt. While it could be argued the government could borrow even more money from the banks and then turn around and give this money back to the banks to improve their equity positions, this simply amounts to transferring debt and does not address the central issue: neither the banks or the government are financially solvent. In fact we have the situation where an insolvent government is borrowing from insolvent banks who, in turn rely on the backing on the insolvent government. Loans now far exceed the capacity of debt repayment, and compounding interest, combined with an imploding economy, will seal their fate. Basically, it is simple mathematics. How long will this continue? Like any bankrupt person... until the credit cards are cut off. (It is important to realize this "credit card cut-off process" will take much longer than in a normal commercial situation.) Japanese banks must be willing purchasers of Japanese government bonds at all times, regardless of fundamentals. Should any government default on its debt, the value of its currency (which reflects the credit of the government) must approach zero. *Currency is simply another unsecured promise to pay.* And, currency issued by a bankrupt government will have no value. Generally speaking, the bank's assets are financial(currency based) and will also fall to zero if the currency collapses. The banking and financial industries are dependant on a functioning government bond market. It is for this reason that governments which are insolvent can continue to borrow." CLOSE QUOTES **** Anybody recall where the Nikkei closed Friday afternoon? I do.... O/49r

To: IngotWeTrust who wrote (8)	11/16/1997 1:54:00 PM
From: Eashoa' M'sheekha	Read Replies (1) \| Respond to of 1756

Hi Again Ole 49r Very interesting thread this.Here's a link to a story we should be hearing more about in the later part of the year. britain.nyc.ny.us What ever happened to this big story?I don't recall any follow-up. btimes.co.za To think that this was only 100 years ago.This year seems longer! pbs.org History has a way of repeating itself,but always with a twist. jacksonvilledailynews.com I wonder if these are going at bargoon this year.Kinda ironic eh? walkleynissan.com Taurus Aspiring Rocket Scientist<VBG>