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

To: Rational who wrote (9326)	11/25/1997 12:16:00 AM
From: Joan Osland Graffius	Respond to of 18056

Sankar, >>* There is a lot of infusion of federal money (liquidity) into the market; this in effect is a reduction in the real rate of interest. >>* The BOJ is SMART. I was surprised to learn this. But, Japan being the second largest economic powerhouse, I should have expected this: They have recently made a mutual PACT with the Federal Reserve Bank of NY to let them have US$, obviating a need to liquidate their US Treasury security holdings. This sends me a message that the economy is becoming weak. Joan

To: Rational who wrote (9326)	11/25/1997 12:27:00 AM
From: Simon	Respond to of 18056

<<They have recently made a mutual PACT with the Federal Reserve Bank of NY to let them have US $.>> Geeeeeeeeez, the NY Fed is going to be a busy little place if the market has a problem. Providing Japan with unlimited credit and the American Brokerage firms with the same. Maybe they can play the shell game. Push a button and transfer a trillion to Japan, and half hour later Japan pushes a button and transfers it back. Better yet move it all around Asis and back again. I knew an insurance company in Chicago who use to transfer $ 200,000 to their Mo. company for the state audit, and then move it back to Chicago for the Illinois audit. The states finally got wise and did a simultaneous audit. POP went the balloon. All the attorneys brought in their claims, put them on a scale and got paid $ 100/ lb.

To: Rational who wrote (9326)	11/25/1997 1:44:00 AM
From: Bearded One	Read Replies (1) \| Respond to of 18056

Does a reduction in the real rate of interest combined with no reduction in the official interest rates mean inflation is going up?

To: Rational who wrote (9326)	11/25/1997 6:07:00 AM
From: Jack Clarke	Read Replies (1) \| Respond to of 18056

Sankar and all: Yes, but where is all the money coming from? Does the IMF, the US Fed etc have the money to bail out Japan, Korea, Indonesia, etc? What will this do to the currencies? If they are printing money or creating it with the push of a button, is there no one to "keep them honest" and make them pay for devaluation of the currency? If the US is to be the "lender of last resort", who, if anyone will be the "enforcer of last resort"? Also, I understand the Japanese will NOT have to liquidate US treasurys: biz.yahoo.com "TOKYO, Nov 25 (Reuters) - Despite market speculation in the wake of a new round of Japanese financial woes, Japanese investors are unlikely to begin a massive sell-off of their U.S. Treasury bond holdings, traders and analysts said on Tuesday. Speculation that Japanese investors would move to sell T-bonds was rekindled by Monday's failure of Japan's fourth-largest brokerage, Yamaichi Securities, which fuelled pessimism over the country's banking sector woes." I seem to remember hearing somewhere that nothing is certain until it is officially denied. Any thoughts, anyone, re: my simplistic thinking? Jack

To: Rational who wrote (9326)	11/25/1997 9:50:00 PM
From: Elllk	Read Replies (3) \| Respond to of 18056

Sankar IS GREENSPAN PRIMING THE SAFETY NET FOR A STOCK MARKET SOFT LANDING? Re: <<* The BOJ is SMART. I was surprised to learn this. But, Japan being the second largest economic powerhouse, I should have expected this: They have recently made a mutual PACT with the Federal Reserve Bank of NY to let them have US$, obviating a need to liquidate their US Treasury security holdings.>> I don't think it is this simple. The BOJ may have made a good move but they owe somebody something here. Is it possible that in exchange Greenspan and the Fed get some control over the how fast the Japanese sell US securities and treasuries so that a slow, controlled retreat of the market can be engineered (they hope?) over several months (more than 1000 points since it was that long ago that Greenspan first said the market was over valued). Possibly a nice stabilizing plan. Other markets get the necessary propping up they need and ours gets the excess cut out with a minimum of pain ( as Greenspan would like), if the engineering works. I might even trust and go with Greenspan on it, if it was totally under his control, because he does understand as well as anyone the complexities of the global situation and the range of benefits and necessary prices which must be paid (as indicated in the speech bearshark brought attention to). But I am not sure it can be done. Among other things, standing in the way are the ego's and deceptive habits of high level politicians (the Presidents, Prime Ministers, etc. and the Ministers of Finance, Secretarys of the Treasurys, etc), who must come to agreements and trust each other (ie as the group now meeting up in Vancouver). These guys are the ultimate professional talking head spin doctors who are used to doing their thing with thier own audience. Can anyone of them, knowing their own skills so well, believe anything they hear from each other? Especially when many of them may very well still be trying to keep a cover on problems and scandals they know about nevermind wondering what they, themselves, don't yet know about and may be about to get broadsided with. In addition, there are a host of legitimate, very serious, highly sensitive, very difficult to resolve, national and cultural issues at at play (such as was pointed out by yorself, the great [and not necessarily unwise] resistence of the Japanese govt to turn its people towards consumerism). What mutual fund manager operating with integrity and free rein is going to be happy with staking current gains on these possibilities: 1) the chances that these guys can genuinely work things out and 2) that even if they do, the outcome could be a 1000 plus down, controlled landing over a period of months. You and many others on the thread are more knowledgeable than me on the precise financial mechanisms through which such a scenario, if implemented, might be engineered but, clearly, controlled selling of treasuries (now somewhat under Greenspan's control?) could put pressure on interest rates and who could discount, having witnessed the recent mysterious and contrary fluctuations of globex futures, the possibilities of seeing equally mysterious nudges up begin to occur in the price of gold? Larry