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

To: Fortinwit who wrote (5880)	6/17/1998 2:58:00 AM
From: FJB	Read Replies (2) \| Respond to of 10921

***************Book to Bill for May********************** www1.newsalert.com

To: Fortinwit who wrote (5880)	6/17/1998 4:24:00 AM
From: Jess Beltz	Read Replies (4) \| Respond to of 10921

OT: Japan. At last I think I understand what is going on in Japan. I have been reflecting on it for days. First, let me say that the some of the very biggest banks there are fairly sound. It is the sector as a whole that is in very deep trouble. At last, however, I think I understand Hashimoto. The most perplexing thing about it all is that the government has done nothing to address the problems in the banking sector. It is the threat of collapse in that sector that could really bring on a Pan-asia depression. Here is what is going on. Hashimoto is relying on a time honored principle (in banking, actually) known as too-big-to-fail. In the US (and elsewhere) this principle is simply that the government will come to the rescue of a very large bank (but not a small one) in trouble, because the economic distortions and dislocations associated with the failure of a really large bank are too much for a country to allow to happen. This is widely known here in HK, because the HK Monetary Authority's stated reason for existence is to defend the value of the HK dollar, and it cannot let HSBC or Hang Seng Bank collapse because that would destroy confidence in that HK dollar value. This gives a very big advantage to the very large banks, because depositors will flock to those banks (deposits are not insured in HK) to insure the safety of their deposits. Back to Japan. Hashimoto has not done anything to discipline the banks, and has in fact done everything possible to allow them to continue operating as is. Why? Too-big-to-fail. Only here it is not a bank that is too-big to allow to fail, it is Japan itself, and it is the US who will be called upon to bail them out. Wise fool! For him, either (1) The US comes to the rescue without forcing the necessary reforms in the banking sector (unlikely), or (2) The US comes to the rescue, demanding changes in the banking sector, but then it is the US forcing the changes, not Hashimoto, and thus he loses much less support at home, (parrticularly among the bankers and MOF people) since the changes forced on Japan are no longer his doing. It seems most unlikely that the US will stand by and do nothing while Japan crumbles. Thus Hashimoto can let Japan go right to the brink of financial ruin secure in the belief that the US will (a) bail his country out financially and (b) him out politically. Witness the statements coming from him recently and the rest of Asia's leaders, particularly here in Hong Kong and in the PRC during the last several days. The great danger in all of this is that the yen will continue to slide and that it will pull the rest of Asia down with it before the rescue package can be strung together. In any event, the crisis should pass during the next two months. jess.

To: Fortinwit who wrote (5880)	6/17/1998 10:52:00 AM
From: Gottfried	Respond to of 10921

Fortinwit, thanks for the post! WSJ says Tokyo is fiddling... Tokyo Touts Another Package, Even as the Data Only Worsen By DAVID P. HAMILTON Staff Reporter of THE WALL STREET JOURNAL TOKYO -- Japan's once-formidable economy is sliding into the Twilight Zone, with unemployment soaring to record highs, output plunging, bad loans mounting, prices continuing to fall and the yen zigzagging around nine-year lows. How have the nation's leaders responded? Politicians plan to take off much of the next month to prepare for a July 12 election -- one that will decide if the ruling Liberal Democratic Party can win a majority in the all-but-powerless upper house of parliament, but not much else. And Finance Ministry officials are jockeying for position in a scheduled personnel rotation.[snip] subscribers interactive.wsj.com GM