Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (9092)	11/23/1997 2:34:00 PM
From: Rational	Read Replies (3) \| Respond to of 18056

Zeev: Korea is going to undergo a deep credit crunch. Korean banks did not lend for real estate because they knew of problems in Japan. However, they lent to a lot to high-tech companies increasing the leverage of these companies to 3:1. These high-tech companies created excess capacity with shrinking demand for their products and are defaulting. Korean bank capital ratios have fallen. They have to cut their loans since new capital is unavailable (as in the US during 1989-90), cut credit lines, and even encourage their risky borrowers for early payoff in exchange for better long-term credit relationship. Softbank is highly leveraged ($5 bil debt). I have not been able to find the leverage ratio yet. But, I have posted an excerpt about their debt problems and bankruptcies of subsidiaries. Softbank is (IMO) going to face severe credit crunch and will have to liquidate at least a part of its US assets to reduce leverage. Korean and Japanese bank regulators will be very tough on banks who in turn will be tough on their borrowers henceforth, leading to recession (or a substantial reduction in growth) in both economies as in the US during 1989-90. Softbank, as a heavy borrower, is (IMO) going to face a situation to reduce leverage and they will thus be forced to sell a part of their YHOO stock. [YHOO thread has many question-answer posts.] Sankar