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To: goldsnow who wrote (15937)	8/15/1998 7:42:00 PM
From: Alex	Respond to of 116796

TACKLING THE CRISIS Japan's opposition must work with its new government ------------------------------------------------------------------------ JAPANESE POLITICIANS FACE AN unprecedented challenge. They must act like real political leaders, with the nation's - and Asia's - fate hanging on how well they do their jobs. That means coming up with policies that address Japan's problems, debating them in parliament to incorporate the best ideas, and crafting effective laws with nationwide support. So far, no one seems to believe they are up to the task. During the four-decade dominance of the Liberal Democratic Party, politicians had it easy. Ruling-party members took laws crafted by the powerful bureaucracy and rammed them through the Diet. Oppositionists protested loudly, undeterred - and unencumbered - by their powerlessness. Amid the current economic crisis and voter anger, that arrangement is breaking down. The weakened LDP has to listen to rival voices. And with its expanded clout, the opposition must consider the impact of its actions. Both sides must learn new roles at a time when their decisions could determine if Japan begins to waken from an economic nightmare - or slides even deeper into it, affecting markets and economies worldwide. In his first policy speech last week, new Prime Minister and LDP chief Obuchi Keizo laid out a plausible plan to nurse Japan's battered economy back to health. He promised more than $40 billion in permanent tax cuts and nearly $70 billion in extra government spending. He outlined a scheme to clean out the estimated $600 billion in bad and doubtful loans strangling the banking system. True, the policies are basically hand-me-downs from former PM Hashimoto Ryutaro, whose resignation following the LDP's drubbing in upper-house polls last month led to Obuchi's rise. That is why both financial markets and the Japanese media responded lukewarmly, at best. But the policies are pointed in the right direction. The crux of Obuchi's task is the overhaul of the financial system. Choking on bad loans from the heady 1980s, Japanese banks have drastically curtailed their lending, suffocating the economy. Many are feared to be near collapse, with dire consequences for their borrowers. Their woes aggravate Asia's credit crunch and undermine confidence in the yen. To cut the Gordian knot, the LDP has introduced six bills in a special 70-day "bad debt" session of the Diet. Its aims: to simplify and speed up the disposal of collateral behind soured loans, and to set up government-controlled "bridge banks" that can take over moribund financial institutions and dispose of their bad loans while continuing to lend to sound borrowers. But the plan is under withering attack in the Diet. The Democratic Party of Japan, big winners in the upper-house polls, called it a joke designed to bail out shaky as well as sound banks - specifically, overextended construction companies that are a bedrock LDP constituency. The DPJ not only put up an alternate bank-rescue plan it says is much tougher, but also wants the Diet dissolved and snap polls to test the LDP's mandate. Obuchi dismissed the dissolution demand; the LDP does not have to call elections until 2000. But the Liberal Democrats lack a majority in the upper house and must compromise if they want to pass laws without undue delay. Meantime, the yen and the Nikkei coninue to drag down with them currencies and stock markets across Asia and beyond. The problem is twofold. First, the LDP plan to overhaul the banks is flawed, not so much on its own merits but because it depends on the integrity and competence of politicians, bureaucrats and bankers - those who largely created the mess in the first place. That accounts for the scheme's tepid reception. The crucial weakness is a lack of clarity on yardsticks to determine if a bank is failing or a borrower should be cut off. That makes it possible for some institutions that ought to be killed to stay alive by fiddling their books and pulling political strings. Obuchi must do his utmost to boost the plan's credibility by establishing clear criteria to decide who survives and who doesn't. He must do so immediately and bring experts into the Diet to explain them. Otherwise, the markets may not trust the blueprint even if it is enacted. The second question is whether the opposition will allow a plan to pass before financial markets collapse. The DPJ is right to test the ruling party's resolve and insist on tougher measures for banks. It is also correct to say that the Obuchi cabinet's public approval rating of just 33% means the LDP's mandate is in tatters. But the DPJ must not hold both Japan and Asia hostage in order to make political mileage. A snap poll now could mean months of political uncertainty - a potential disaster not only for Japan and Asia but also the world. And it is far from clear that a DPJ government would be welcomed by Japan or the markets. After all, the party was hastily cobbled together from smaller groups just four months ago. For his part, Obuchi has pledged to compromise. The DPJ should ensure that the ruling party does not succumb to its baser instincts and implements a tough, thorough clean-up of the financial system. At the same time, instead of risking greater disruption, the opposition must work with the LDP to tackle the Crisis effectively in this hour of peril. That, more than anything, would enhance not only the DPJ's credibility in future polls but also its image and standing internationally. pathfinder.com

To: goldsnow who wrote (15937)	8/15/1998 7:48:00 PM
From: G.T.	Respond to of 116796

Watch Dow Transports Goldsnow, People are watching the world events. It is their hope and expectations that have kept the market up so far. If one looks at the Dow Transports, they will notice that they have lead this market for the last several years. On friday the Transports made a new closing low, now down 20% from their top of several months ago. This is a mass participation market and unfortunately the mass will be the main participants to the down side. Soon and very soon the market will accelerate to the down side with every 1,000 dow points taking off one trillion dollars of wealth. What few people follow is the 55 trillion derivatives market. The pending down draft will be more than the economy can handle and the bear will be around for a decade or more not just a year or two. How about the people with the 125% home equity loans. Lower interest rates will not save this earnings driven market in a decelerating economy.