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

To: Investor2 who wrote (13215)	1/17/1998 10:07:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

I2. First the marking to market. Supposedly, financial insitutions are holding big chunks of real estate on their books at cost which is under the current market price. Marking to market will add assets to their books hopefully bringing the banks closer to the 4% required. The problem with that is that unless an actual real estate transaction has occurred, who determines the real value of this real estate? As for the the Nikkei having tested 14,000, yes, in principle you are right, but in practice, if such a tripple bottom is breached, all hell will break loose. I think the LPD has been watching charts for too long and has made a concerted effort to defend 14,000. When government intervene to "defend" magino lines in the market, they almost always fail. They have pulled all the stops (the artificial stops) in that effort, including lip service tax cuts, forcing savers in Japan to become stock holders in the failing banks of Japan and now the accounting smoke and mirror tactics of revaluing the real estate. Unfoortunately, Japanese banks have about 13 trillion yen exposure to the rim countries, and if some 20% of these need to be written off, the new artificial infusion of 4 to 6 trillion in real estate revaluation will not be enough (they still have on their books oodle of overvalued real estate loans which are not performing). Zeev

To: Investor2 who wrote (13215)	1/18/1998 7:32:00 PM
From: DLS	Respond to of 18056

Re: the Real Estate. I don't know about the Asian holdings. But I can say with a great deal of certainty that their US holdings are likely on the books for much MORE than they are worth (the only variable being at what rate they have been depreciated ((and they do have different depreciatiing schedules over there)) They grossly overpaid for the properties by our standards (even at the time) because their relatively cheap cost of funds allowed them to bid more for the cash flows. Even the sizeable Asian owned properties in the US that are currently for sale now cannot be sold at a price to make the lenders whole. It is too bad none of the old RTC contractors are public (that I am aware of) because they have been positioning themselves for the time (if ever) when these lenders are compelled to sell them for what they are worth. When it happens there will be no shortage of REITS lined up to take them.