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To: MrLuckyman who wrote (22123)	10/18/1998 4:50:00 PM
From: e. boolean	Read Replies (1) \| Respond to of 164687

While the rate cut was being played in the U.S. press as doing our part to help those Asian/Latin American/Russian economies, the Japanese perspective shown here says that they see it as a response to specifically U.S. problems: > Fed move shows US,Japan face similar woes-analysts By Masayuki Kitano TOKYO, Oct 16 (Reuters) - The U.S. Federal Reserve's surprise decision to cut interest rates shows that the U.S. and Japanese economies now face similar problems -- weak banks and an aversion to risk, traders and analysts said Friday. ''The Fed rate cut implied that business results for U.S. banks will seriously worsen in the fourth quarter this year, suggesting the chance of at least two more credit easings,'' said Takeshi Hanai, executive manager of the Industrial Bank of Japan. ... Rumours of funding difficulties in the interbank market, which have clouded Japanese banks in recent years, have spread to U.S. banks in recent weeks. In the aftermath, U.S. banks have been forced to tighten lending practices to assuage market fears their unrecoverable loans might balloon. ''A credit crunch is sweeping through the United States right now at a furious pace,'' said Masuhisa Kobayashi, JGB strategist for Merrill Lynch. ''Before, credit creation was occurring at an incredible pace... We are seeing a reversal now, a trend which resembles Japan after the collapse of its 'bubble' economy,'' Kobayashi said. ... Traders and analysts said the United States faces more problems ahead. Despite recent assurances from New York Federal Reserve President William McDonough that he was ''not aware'' of any LTCM-like exposure in the rest of the U.S. hedge fund sector, market players fear another hedge fund implosion on the scale of LTCM may be lurking around the corner. ''The latest rate cut is not enough to deal with the crisis facing hedge funds. It is possible that the U.S. may enter a recession, rather than a soft-landing, which had been the widely held expectation in the past,'' said Merrill Lynch's Kobayashi.