OFF TOPIC:
Kim, Japanese oil companies get most of their oil from the Middle East and international oil companies like Shell, Esso (an international subsidiary of Exxon), Mobil, etc. The Japanese also have newly acquired drilling rights through joint venture oil projects in China, Russia, and the Spratly Islands (the hugh oil reserves that China, Taiwan, Vietnam, Japan, the Philippines, and others are claiming rights to).
The situation, financially, in most of Asia right now is bleak. Most Asian nations are in deep financial trouble. However, each nations' situation is sightly different.
The Japanese are business savvy but they have multiple problems: shaky loans to other Asian countries and corporations, domestic banks that are both hugh and wobbly, dishonest politicians with ties to dishonest businessmen in private industry and to racketeers, too much debt, a shaken and mistrustful public, and LARGE institutional bankruptcies that are looming that might very well shock the entire gobal economy.
That's just part of the problem. For years the Japanese have been putting band aids on this problem, but the problem is so large now that there is not enough money in the entire world to clear up this problem.
However, for all of our sakes, I and my wife are praying to God that the Japanese pull off their attempt to save what amounts to an admitted 4 or 5 trillion dollars in shaky assets with a government float of 50 billion dollars in bonds (I converted the amounts to U.S. dollars for your convenience). The Japanese Diet (parliament) is currently debating the amount of the financial rescue of their banking system, but even a 200 billion dollar rescue package would be suspect. How can 200 billion dollars save 4 or 5 trillion dollars in shaky assets? The Japanese claim that they have 600 billion dollars in bad loans but that part of the shaky assets are at least twice that amount.
I am an American who has lived in Japan for the last nine years and I can tell you that the situation is much worse than the governments, stock brokers, newspapers, and news programs of the world have told the public. And Japan is just one Asian country. They each have their own problems. They too have hidden large problems with band aids and instead of letting companies go broke that deserved to go broke, they kept subsidising the companies until the problem is so large that the entire financial system of the world could collapse.
If even a country like Indonesia were to collapse, the dominoes will fall one by one all over Asia, then South America, all around the world, and like in 1929, the last dominoe will be the U.S. The U.S. stock market crash in 1929 started six months earlier in London when the FTSE crashed. The Englishmen sold their American stocks and we crashed. Before England was struck, many other nations around the world were struck by the world-wide deflation that started in 1927 and finally hit the U.S. in 1929. At the time, almost everyone in the U.S. thought that the deflation would not touch the U.S. That's what the U.S. government and U.S. newspapers were selling to the American public just before the 1929 crash.
The Japanese are the solution to this current problem. If they liberalize their economy, mend their ways (as the current government of Japan is attempting to do), then the Japanese government, the U.S. government and the G-7 will be able to contain this problem and we will all escape, in a worst case senario, with a 1973-1974 mini-crash and recession. That's not bad considering the alternative. However, if the Japanese do not get their house in order quickly enough, we'll all be in trouble.
Kim, I'm sure I don't have to tell someone as savvy as you that we've all contributed to this problem. The entire world has been on a debt, credit binge for the last thirty years. We are in no position to lecture to the Japanese or anyone else. We must and will cooperate with the Japanese and the G-7 to solve this liquidity problem.
Korea looks like the largest of the most shaky financial systems. If Korea goes we'll all go down. The U.S., Japan, the G-7, the IMF and Korea are all trying to solve that problem also.
Hong Kong is hurting by keeping their peg to the U.S. dollar (it's cheaper to do business in Singapore right now), and their overlords in Beijing are communist who don't like or trust democracy and true capitalism. They hardly even understand normal business practices, though there are numerous business savvy people in Hong Kong and Taiwan. However, if Beijing leaves Hong Kong to rule itself Hong Kong will prosper, assuming that we can keep the rest of Asia from falling into the economic black hole that's skirting all of Asia right now.
We'll be lucky if all we get out of this is a slow, gradual decline in the U.S. stock market like in 1973-1974. From that we can bounce back. The alternative is not pleasant but I'd much rather look at facts as they are than stick my head in the sand.
GOGI |
