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To: Oeconomicus who wrote (52)	5/6/1998 4:23:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 3536

Bob, I've seen a lot of different analysis regarding what level of the Nikkei makes the banks as a group insolvent. I believe the real line of death is around 13,000. It is kind of irrelevant however. For all intents and purposes almost all of the banks are already insolvent. And the insurance companies are probably in worse shape. The reason it is irrelevant is that the government will either inject capital through a back door or allow wink and nod accounting measures of the type you indicated. And the international community will accept it because no one can afford a wholesale collapse of the Japanese banking system. They need to be more aggressive in cleaning up the banks but no one has the political will to do what is needed so the problem lingers and worsens. The Japan premium is ranging anywhere from 20 to 50 basis points. Henry