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.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Michael who wrote (8626)	3/21/1998 1:09:00 PM
From: PaulM	Respond to of 116805

Hi Michael. There's always so much in your posts. Here are some thoughts. 1. Wouldn't read too much into Soros and Buffet U.S. bond play. Who would buy a Japanese bond at 1.5% interest? They probably feel, correctly, that any treasuries sold will be bought by the Fed. 2. "I can't see why Japanese investors would liquidate there new overseas holdings" - If we're talking about individuals, who are good savers over there, then yes they probably won't be forced to do anything. I guess the question is how cheap and attractive stuff at home becomes as the crisis worsens. Believe it or not, Japanese markest still trade at a premium. Japanese cultural factors, inlcuding maybe a sense of superiority, would also tend to keep the money at home. 3. Michael sez the amount of overseas assets to repatriate is dwarfed by savings that could theoretically go abroad. I'm not sure I agree, even theoretically. Those assets abroad also include loaned capital. Consider a bank with a Japanese real estate and stock capital reserve base. Those markets were worth many trillions more 7-8 years ago. Assuming an 8% reserve base, the value of the loans that need to be called would be MANY TIMES some percentage of those many trillions, no? That's why I think Japan has papered this over for years now. 4. "If its just liquidity" - But liquidity is always the issue, isn't it? When a crisis of confidence crosses a certain threshold, and folks call in the chips, they find out they have a fraction of what they thought they had. This is a true of a bank, or for example, an overvalued stock market. (Digression: Some say its true of the "paper gold" market). Yes, the govt will step in and pump money into some of these situations. But it can't do so everywhere. A country has to balance the evil of institutional failures, on the one hand, with the implications of walking away from its currency, on the other. That's why I suspect we'll see both devaluation and bankruptcy in Japan. 5. Re: April 1: my understanding is yours, but I'm vague on exactly what rules are being changed. I think April 1 should mean an outflow of capital to the U.S. until the threshold is crossed.