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To: Trey McAtee who wrote (8453)	9/23/1998 11:18:00 PM
From: MeDroogies	Respond to of 19080

Sorry, that's where you're wrong. First of all, Japan began selling back T-Bills some time ago, because of their need for cash. The repatriation of debt has begun, and has been performed orderly and quietly. Secondly, most US investments in Japan have been scaled back considerably over the past few years. I can speak with a great deal of personal knowledge about pension investments by one of the 5 largest companies in the world...and how Japan has been officially off limits for several years. Most investments there have been sold off. Japan's greatest leverage (and it isn't so great right now) is THEIR holdings of US equities. Problem is, they can't sell those right now because these holdings represent just about the only PERFORMING assets Japanese companies hold....selling those off would be suicide and the Japanese know it. Now, Japan - at home - has a problem. They are using antiquated accounting methods to maintain certain fictions of liquidity and asset performance. The sooner they own up to these fictions, the more rapidly they will emerge healthier. If they don't they'll get continually sicker...indefinitely. If they do own up, they take a tough short term hit and then have a rapid recovery. Right now, it's a political game for them. US treasuries and companies are very well insulated from a severe shock, should Japan have a severe reaction. While their situation is not good, it is still far from a depression...though it could cycle into one quite quickly. They are, after all, already in the liquidity trap. Should proper attention not be paid, this will have drastic consequences for Japan. The US should hurt a little from that, but benefit in the long run.