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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Michael Sphar who wrote (5782)	6/10/1998 6:21:00 PM
From: Jess Beltz	Read Replies (1) \| Respond to of 10921

Michael, the answer to your question is fairly obvious, actually. What may be good for Nissan may not be good for the Japanese economy as a whole. In fact, the slide in the yen is extremely dangerous, and for the following reason: The Hang Seng got hammered here in Hong Kong yesterday on fears of a new attack on the HK dollar triggered by the fall in the yen. There is a very strong linkage between the value of the yen and the value of all of the regional currencies, and as the yen goes so go they all. The continuing devaluation of the whole basket of currencies spells trouble on two fronts: (1) It creates tremendous internal inflation for all foreign goods for the peoples of those countries, but more important here, (2) Much of the debt of corporations in this part of the world is owed to foreign banks, many in HK and Japan as well as the West. The repayment obligations of those firms is denominated in US dollars, forcing the exchange rate risk off on to the borrowers. As their currencies decline in value against the dollar, their debt obligations in terms of their own currencies rises, and the danger of bankruptcy looms larger daily. The Japanese banking sector in particular cannot stand much more bad debt, as the current levels are what's killing the banks as it is. As I wrote yesterday, without bond markets, a systemic failure in the banking sector in Japan means the end of debt funds to fuel economic activity. That pretty much means the end, period. jess.