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To: Jon Koplik who wrote (19192)	12/6/1998 9:11:00 PM
From: DaveMG	Read Replies (1) \| Respond to of 152472

Jon, Got myself a complimentary copy of Grant's Asia Observer. The lead is Japan. Here's a few quotes: "Japanese banks are finally beginning to recapitalize their balance sheets using public money.......The question is will this balance sheet restructuring do anything to make Japanese banks more willing to lend?We think the answer is no. The bad debt problem is so ubiquitous and so ill defined that no one knows how bad the the problem is....The simple truth is Japanese banks are afraid to lend-even to eachother..." "One key problem is that recapitalizing the banks is a necessary condition but not a sufficient condition to turn the economy around.In other words you can't even begin to turn around until you've done that. But that does not guarantee you a turnaround..." "For the sake of the Japanese economy and for the benefit of Asia, it is vital that the Japanese gov have access to reasonably priced funds. In this context, how should one view Moody's decision to cut Japans sovereign debt from Aaa to Aa1?" Answer provided by Vincent J Truglia of Moody's:" More importantly it is the deficits going forward, the tremendous deterioration...They are in a policy bind. You can understand that if they don't get the economy going then the contigent claims rise. But to get the economy going they may have to experiment with fiscal stimulous. The problem is that for the last five years, fiscal stimulous has only worked for a a short period of time. What did they end up with after 5 years?No growth and a huge increase in debt...I think the most fundamental problem, even beyond dealing with banks is they have got to restore consumer confidence. This is going to be very difficult to do. Again I repeat the same thing we told you in July, you have got consumers that are very well informed. This is actually to the disadvantage of the government because they(consumers) know there is a very large fiscal deficit problem. They know there is a huge pension problem. They know there is a huge banking problem. They know unemployement is going to rise. They know there is a private sector pension problem. They know there are difficulties with the insurance industry. As a result if you are a reasonable,conservative Japanese consumer, what is your reaction going to be to all these various government pronouncements?Any tax cuts they are probably going to save them. I mean this is a very reasonable thing to do.." Feeling cheered up yet? Don't think I should quote anymore without permission. Get out there and do your duty to support the global economy. Spend away,buy gobs of XMAS presents, Qphones... Do it for your country if you won't do it for yourself.. DMG