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

To: Mark Myword who wrote (4161)	6/4/1998 8:35:00 AM
From: Worswick	Respond to of 9980

Zeev and Mike..thinking about this, the Japanese debt which keep ratcheting upwards...first, it was $200 billion problem loans held by the banks: then, $349: then, $500: now, $1 trillion. I have come to think about this.....for the last 18 months.... that the true heart of the "do nothing" Japanese attitude is that the real numbers on "non-preforming loans" outstanding from the bubble days in Japan are somewhere between $2-$3 trillion. Yikes!! Now, as big as that number is with the cratering of Asiza you have to add another $500 billion with new damaged credits. The Japanese are unusually hard bargainers, astute, tough, smart. Why this do nothing attitude when they have effectively coloniazed all of Asia economically. They won the war!! Witness Japanese inroads even in Pakistan in establishing mercantile beachheads.... we didn't even know about until the bomb! This whole refusal to deal with this problem has always stunk to me. The Japanese are really beleagured here. They are effectively an island nationa at war with anyone and everyone. Perpetually. They have to be in thier view. It isn't that the whole country is in denial. It is that the problems are so huge that there is probably no way short of bankrupting the whole financial system in Japan that you can start over. I must add: In this Japan is much like the US. If the total debts of Japan are $11 trillion take all the US debts, government guarntees, etc. of every sewer project, brokerage account, bank account and building in the US insured by some "full faith and creidt of the USA" and the putative debts here probably in the order of twice the Japanese $11 trillion. There is something in this whole Japanese situation that simply doesn't "compute". Think about this pop psychology term "denial". I suggest that reality is well known here and they simply can't admit it. My best to you. ref: To: +MikeM54321 (4159 ) From: +William B. Herbert Wednesday, Jun 3 1998 10:33PM ET Reply # of 4174 Mike : re: Business Week , 11 Trillion US$!<< I copied the article , but don't have the SI printout. It's the 5/18 issue of BW. The figures according to them are - actual public debt $11 trillion , and actual problem loans $1 trillion. Personally , I suspect the problem loans are considerably higher , but it's all in how you define "problem" . Many Japanese companies large and small are very highly leveraged , and the banks used to lend money to anybody who breathed. They define a problem loan as not even paying interest - in other words , no hope of collection. Think about it - a lot of companies can scrape together interest , which usually isn't too much of a problem. If a loan is simply paying interest , it's not a "problem" loan ! This is regardless of whether there is any realistic chance of the PRINCIPAL ever being repaid. No telling how big this number is , but it is likely huge. The BW article is stating the government's "official" figure , and adding in a few extras , but still under the definition of "paying interest, no problem".