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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: HB who wrote (4092)	6/2/1998 10:01:00 AM
From: Worswick	Read Replies (1) \| Respond to of 9980

Dear Thread: I may be wrong but the pith of the Barron's Albert Edwards article was "L" which he computed to be "exactly" like Fed Credit. eg: "if you take those two categories of financial lending out to produce a chart line showing bank lending to the private sector, which isn't spinning around in the markets, fed funds. track that series exactly. I was quite shocked when I realized that. I mean, what the Fed is looking at is that bank lending for buying goods isn't going up, so it doesn't need to tighten rates. They're saying, "We are going to tolerate an explosion of bank lending generally, even though it's financing inflation in asset prices." Isn't Fed funds the same as Fed Creit. YOu can find the fed credit figure each week in Barron's in the box "Federal Reserve Data Bank". It seems to me, since I have followed Fed Credit for years that the bloating of Fed Credit is in the range of 8% to 12% a year for as long as I started tracking it.. say 6- 10 years. So. What is Alan Edwards saying? Between times this is in the Whoops catgory.... For private use only (c)Financial Times TUESDAY JUNE 2 1998 News "INDONESIA: Banking audit 'finds irregularities' By Sander Thoenes and Gwen Robinson in Jakarta Audits of six Indonesian banks taken over by the government indicate massive irregularities and suggest that the cost of the bank sector bail-out will be much higher than expected, newspaper reports said yesterday. Two authoritative newspapers reported yesterday that audits of six of at least 55 banks that have been taken over by a state-run bank restructuring agency, IBRA, had revealed a gap between assets and liabilities of some Rp85,000bn ($7.5bn). Bank analysts said the data suggested over-valuation of outstanding loans and under-reporting of deposits, which means that IBRA will have less to recover and more to pay out. The reports, citing IBRA sources and regarded as plausible by bankers, said that the two largest banks under IBRA, Bank Dagang Negara Indonesia and Bank Danamon, under-stated their liabilities by 33.3 per cent and 33.1 per cent respectively. BDNI's loan portfolio and other assets were worth less than a fifth of what the bank had reported. IBRA staff declined to comment and Syahril Sabirin, central bank governor, said only that the Rp85,000bn figure did not, as newspapers suggested, represent the loss the government would bear. Frank Shea, Bank Danamon vice-president, said the gap between the reported and audited data on deposits could be due in part to different exchange rates used; his bank dominated the market in dollar deposits. "It must be interpretational," he said. "It can't be fraud." Either way, these figures suggest that many banks are likely to be in much worse shape than earlier reported, raising the likely cost of rescuing the banking sector beyond the Rp102,000bn the central bank has lent to commercial banks since late last year to offset a run on the banks. At the recommendation of the IMF, Indonesia's government in January guaranteed all deposits and credits to the country's more than 200 commercial banks. Introduced to revive confidence in the banks, the guarantee was supposed to come in tandem with strong central bank control over the banks and a full takeover of the heaviest borrowers. But bankers said that IBRA failed to exert sufficient control over the banks and got lost in political squabbles and vested interests. One of its directors was fired, another resigned last week. William Keeling, senior adviser to Dresdner Kleinwort Benson in Jakarta, said the guarantee had only encouraged bad bank practice. "You suddenly had a huge incentive to let things get worse knowing your deposit base was secure and the government would pick up the pieces." Meanwhile Indonesia yesterday resumed negotiations on the restructuring of its private sector debt in talks which were postponed last month owing to the political uncertainty in Jakarta. The negotiations, which are expected to last until tomorrow or Thursday, will look at ways of rescheduling about $80bn of dollar and yen-denominated debt, most of which is owed by private Indonesian companies to foreign banks". Where does this leave the German and Japanese banks?