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To: Bobby Yellin who wrote (4945)	12/30/1997 11:31:00 AM
From: The Vet	Respond to of 116756

Low interest rates, easy credit and high real estate values are the stuff disasters stem from. Japan's problems largely stem from that combination. Real estate prices can quickly become inflated where there is easy money and a demand. However that price bears no resemblence to the real worth or earning power of the property. Banks traditionally view real estate as excellent security and will lend against it allowing the owner to buy more or to place the equity he has in his property into other even riskier ventures. Once the demand for real estate drops or the interest rates increase the whole scheme unravels as we see in Japan now. Asset inflation coupled with the traditional bankers view of security quickly produces a house of cards that is just waiting for the slightest push to collapse. All the bailouts do is shuffle the liability - a game of international musical chairs waiting for the music to stop!