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

To: Mason Barge who wrote (5954)	6/21/1998 11:26:00 AM
From: Ramsey Su	Read Replies (1) \| Respond to of 10921

Mason, the US version of RTC bail out would most likely not work for Japan, for economic reasons as well as political reasons. Before FIRREA became law, the banks and the S&Ls were fighting big turf battles with the S&Ls winning. FIRREA put an end to that. Too lengthy to discuss here but there is one theory that the US really never had an S&L problem which the industry could not have fixed itself. In hind sight, I am not sure if I disagree. Being involved first hand, many institutions became quite savvy and were at the verge of turning things around before the RTC closed them down. The RTC fire sale, which started around 1991 till its sunset date (1993?), put enormous pressure on real estate values and triggered a round of devaluation in states such as California which were previously considered bullet-proof. However, the majority of the bad debt during the S&L crisis were secured by assets. One can argue that the taxpayers helped to fund projects which should never have been built. In the end, it did provide a strong infrastructure which many of today's flourishing businesses took advantage of via cheaper real estate costs for their plants and offices. Japan's problem is proportionally much greater. In addition, it involves international loans with an unknown amount which is unsecured or secured by very questionable assets. If they do a similar fire sale, all hell may break loose. Needless to say, the likes of Goldman Sachs would love to see a fire sale where they can penetrate the Japanese market and buy prime assets pennies on the dollar. The cynical side of me is suspecting that major lobbying effort from this group are also the "advisers" to the US policy makers on how to deal with Japan. Japan will reform but not in the manner the US or G7 dictates. Something totally different will come out of the crisis and we will bear witness to these changes in the next few months. Hopefully, we are all smart enough to see it and make a few bucks off the lesson. Ramsey