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To: goldsnow who wrote (3989)	12/8/1997 11:40:00 PM
From: Terry Rose	Respond to of 116815

The leaked report of Japanese bank's problem loans is a mindboggling amount. What is really scary is that it does not include their insurance companies which are taking a beating. I have a very credible source who states that their total problem institutions will require 2 trillion dollars to adequately stablize this crisis. I seriously doubt that any of their plans can work, and that they only delay the inevitable. Over the past few years they have tried to gradually deflate from their prior bubble economy by lowering their short term rates to absurb levels. This lead to a lower yen and an increase in their positive trade balance and their ability to load up on U.S. assets. They should be in great shape, except for the fact that they are still paying for their prior bubble days and the pace of deflation is accelerating. Add to this chaos a developing liquidity crisis as evidenced by an increase in their bank lending rate which is pushing 1% despite BOJ inflating to meet demand, some other plan must be attempted quickly. Here are three options that come to my mind: 1. Liquidate non-yen assets 2. Use public trust fund money 3. Let market forces sort this out. I would opt for #3, since their is no guarantee that 1 or 2 will work, and by letting market forces finally find the bottom a true economic recovery can begin.