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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Bobby Yellin who wrote (77)	9/11/1998 11:19:00 AM
From: Worswick	Respond to of 2794

Bobby... something nobody else would post. The World Labor Site... the Communists take on this scenario being played out. Only on Derivatives: Darth Vader's Revenge... For Private Use Only WSWS : News & Analysis : World Economy Intense conflict over Japanese bank "restructuring" (C)Nick Beams 4 September 1998 An excerpt: "....When US Treasury Secretary Robert Rubin and Federal Reserve chairman Alan Greenspan meet with Japanese Finance Minister Kiichi Miyazawa in talks today, there are sure to be demands from the US side for an acceleration in the program of bank "restructuring.... The United States is demanding an end to the so-called "convoy system" in which finances are used to prop up weaker banks, insisting that insolvent banks be driven to the wall. But this program, which is supported by some sections of the Japanese ruling class, is provoking intense opposition from government supporters who maintain that insolvent banks must be given a "soft landing" or the entire banking system will collapse. One of the spokesmen for this point of view, Nomura Research Institute chief economist Richard Koo, maintains that Japan does not just have problem banks; it has a "systemic banking crisis". According to Koo, the US demand that the market should deal with problem loans and that insolvent banks be shut down is a recipe for disaster. The state of the banking system as a whole, he maintains, is indicated by the fact that even the largest Japanese bank has a capital/asset ratio that barely meets the international standards of 8 percent. Hiroshi Ota, the business editor of the Japanese daily Yomiuri Shimbun, has echoed these criticisms in a recent comment. Criticising opponents of the government policies, he said the term "soft landing" had taken on a negative image, contributing to the decline of the yen and share prices. "Another factor contributing to the sell-off of Japanese assets is the vanity of US dealers who claim that the Japanese government and financial authorities are incompetent. What does the 'hard landing' that they advocate actually mean? Miyazawa expressed similar sentiments when he addressed the Diet (parliament) last week. If the LTCB were allowed to collapse, he said, the damage to the economy would be incalculable because the bank had 50 trillion yen worth of derivative contracts at the end of March. If the LTCB defaulted on these contracts, "Japanese banks as a whole might be debarred from such transactions". The governor of the Bank of Japan, Masaru Hayami, went further and warned that if any large Japanese banks with huge derivatives contracts failed this would trigger a chain reaction on international markets. In other words, the crisis provoked by the Russian default would seem like a storm in a teacup by comparison". For the complete texts see: wsws.org wsws.org The problem with news on this crisis - cerntainly one of the interesting or grave depending upon your point of view - is that we are getting such "spin" from the "media/financial/government establishment" here. Are we reduced to getting our news on this small niggling "problem" from the World Socialist Web Site? My best to you, Clark