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: Terry Maynard who wrote (21262)	3/19/1998 9:24:00 PM
From: dwight vickers	Respond to of 42771

Terry, Thanks for the post. Dwight

To: Terry Maynard who wrote (21262)	3/19/1998 11:34:00 PM
From: Paul Fiondella	Read Replies (1) \| Respond to of 42771

(Off Topic) reply to a lesson about Japan "By contrast(to the US in the S&L crisis), in Japan, the problems are across the entire banking sector. There will be no domestic Resolution Trust type cure for the problem without the participation of foreign (particularly American) banks, because there are not enough healthy banks left in Japan." Actually the Japanese have taken the approach of having the government increase bank liquidity by buying subordinated debt or preferred shares of the banks sufficient to recapitalize them to the level of international lending standards. This influx of public money in turn caused the banks to be able to approach the international bond market once again for funds without having to pay 1/2pt to 1 point higher interest rate premium they had to pay for not meeting international lending standards. (Greenspan referred to this London borrowing i n Congressional testimony.) However the author of the quote is incorrect in thinking that Japanese banks cannot be restructured without funds from US banks. The Bank of Japan has enormous reserves. Unfortunately for the US, these reserves are in US debt instruments. Thus the solution to any major Japanese banking collapse (because like the author I agree there is no effort being made to mark down and dispose of bad assets in Japan, thus no Resolution Trust) would be the liquidation of even more reserves in Treasuries and the converting of the $$$ to yen and the pumping of yen into the Japanese banks by the government. We in the US would then watch interest rates here rise as money left the US. I believe part of the the run down of the 30year bond (as private Asian capital fled) and then its unexpected run up (as governments responded by converting treasuries and gold in to $$$$) is precisely due to these pressures. ================== One scenario for transferring the Asian crisis to the US economy has a run on US treasuries as stated above coupled with an attack on the dollar in an atmosphere of increased panic about trade deficits. Wasn't it the massive decline in the value of the $$$ vs the yen that triggered 1987? In any case such a scenario would lead to an increase in US interest rates and an end to this Bull market. And just think you don't have to wait too long for Act II to finish. The end of the Japanese fiscal year is only 11 days away. Then we see who is bankrupt, who is left standing, and who needs more yen.