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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: robnhood who wrote (18282)	5/10/1998 9:25:00 PM
From: Haim R. Branisteanu	Respond to of 94695

rrman, have you read Business Week of this Friday?? A quite chilling article about Japanese accounting procedures and how helpless they are in cleaning a pile of debt which is something like 250% of Japan GDP. I do not see the US bonds going below 5.75% very soon even with inflation around 1.5%. Neither I think AG will raise interest rates. The best way out of this crisis which may hit the US is to inflate the world economy and have Japan digging themself out of the hole. I suspect China is in similar troubles. Do not want to sound alarming bur last fall Bonie Bear was telling us the sky is falling if the NIKEY goes below 15,000. S.Korea already hit or is close to new lows. BWDIK Haim JAPAN'S REAL CRISIS Until its hidden debt mess is cleared up, no recovery is possible If only Japan would listen. That sentiment, in one form or another, has been a favorite among foreign governments, executives, and commentators for years. In the 1970s, as the Japanese created the world's most dynamic automobile industry, Americans urged them to curb their exports. When Japan rode a wave of prosperity in the 1980s, Western governments demanded that the country open up its restricted markets. And today, as Japan staggers into recession, finance ministries around the world are begging the government of Prime Minister Ryutaro Hashimoto to spend, spend, spend. Cut taxes, Mr. Hashimoto. Prime the pump by tapping Japan's $10 trillion in savings. Just act, and you can kick off a recovery in Asia that will prevent a global slowdown and end the region's crisis. Japan's Debt Trap OFFICIAL LEVEL PUBLIC About 100% of GDP, DEBT or $4.5 trillion. That's on a level with such highly leveraged Western countries as Belgium, Canada, and Italy. NONPERFORMING About $600 billion. The BANK LOANS government has recently admitted to that much after claiming for years that it was only about $200 billion. CORPORATE Debt exceeds equity LIABILITIES by an average of 4 to 1 in the corporate sector. That level is forcing companies into bankruptcy at a record rate. PROPERTY Official Level. Japan's PRICES commercial and household real estate is still valued at $17.5 trillion. PROBABLE LEVEL PUBLIC Actual public debt could be as DEBT much as 250% of GDP, making Japan the most indebted nation in the industrialized world. To reach that number, analysts throw in the debt of Zaito, an off-bal- ance-sheet government lender. NONPERFORMING More like $770 billion, according BANK LOANS to the ratings firms. The extra $120 billion is bank declared nonperforming but probably not being serviced by distressed corporate borrowers. CORPORATE The situation is likely to be worse, LIABILITIES since poor accounting does not reveal borrowings overseas or pledges to cover the debt of corporate affiliates. Private pension plans totaling $600 billion are underfunded by as much as 40%. PROPERTY A markdown of 10% to 30% is PRICES probably necessary. That means households with mortgages are sit- ting on $250 billion in paper losses.