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.

Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: dwight vickers who wrote (19248)	12/27/1997 11:55:00 PM
From: Paul Fiondella	Read Replies (1) \| Respond to of 42771

You have hit upon something in your post The ultimate scenario does involve Japan imploding with a collapse of their stock market (below 14,000) followed by a collapse of their banking system and massive bankruptcies. I have read that Japan just did away with the 4% liquid capital requirement for domestic banks. This means that many Japanese domestic banks have more than 96% of their assets in the stock market, real estate, and outstanding loans. The international standard is I believe 8%. According to the NYTimes JAPAN is using $10 billion a week to defend the Yen. It was back up over 130 last I checked. I don't think the US could survive a run on Treasuries by Japan. IT would cause a total loss of confidence in the International monetary system. Since US Treasuries have replaced gold as the final refuge of money seeking safety, and provide some stability in the midst of chaos, the only response to a sudden weakening in Treasuries with the known cause being JAPAN would be a panic. I have to wonder whether the JApanese ever acted on the US offer to do repros. (That way the treasuries remain intact.) Your figures showing a slow redemption of US Treasuries are also scary. Once the US economy slows down, those balance of payment deficits and the redemptions even if slow look like trouble since they reflect a capital shortage in Asia (the reverse of the net savings flow from Asia that has allowed our Treasury debt to get as astronomical as it is). Another way to look at this is how can the US sell its debt if there are no foreign savings surpluses being generated to buy it? Quite a mess. I guess I better sell my house and take those real estate capital gains before the IRS takes them away!