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Technology Stocks : Discuss Year 2000 Issues -- Ignore unavailable to you. Want to Upgrade?

To: John Hunt who wrote (5879)	5/31/1999 7:56:00 PM
From: freeus	Respond to of 9818

This is an interesting one: have you all seen it? FredBear Date: Thursday, 5/27/99, at 4:43 p.m. The guy who wrote this is an American living in Japan. He writes very interesting (and bearish) articles which make there way into the Japanese press. This one is very interesting. The other year 2000 problem The world's largest financial institution is facing a ticking timebomb. The largest financial institution in the world is the Japanese Postal Savings System. It was created in the mid 1960's as a convenient and safe system for "ordinary people" to invest in time deposits. In return, the government benefited from the steady cash deposits. The original concept was that small-lot depositors would create a small financial institution. Japan was not a wealthy nation then and Japanese banks and government ofiicials continually drummed the concept of save, save, save to the Japanese consumer. And save they did. Today, the outstanding balance of Postal Savings is about 250 trillion yen (~U.S.$2.2 trillion). Those are trillions not billions. You rarely see trillion dollar numbers thrown around because those kinds of numbers are reserved for people like Alan Greenspan when he talks about...whatever it is he talks about. I think he talks about gross domestic products. So, most people associate the phrase "trillions of dollars" with Alan Greenspan which means most of you are asleep right now. The sheer size of Postal Savings makes it capable of affecting the entire global financial picture should any drastic changes occur. The basic financial intruments of Postal Savings are 10-year fixed-rate deposits. If you think back ten years ago, Japan was at the height of it's financial power and the inflated bubble economy. In 1990, the Postal Savings was offering compounded annual yields of over 8.5% on ten-year deposits. Japanese "ordinary people" poured about $1trillion into the system. They subsequently withdrew about 40%, but the remaining balance with interest will come to maturity in 2000. Starting in 2000, people will be lining up at post offices to redeem their 10-year bonds. Since rolling over into new fixed-rate Postal Savings deposits will yield only about 0.2% interest, I expect most will want to put their money elsewhere. How much are we talking about here? Well, we're talking about an Alan Greenspan amount of money...about $1 trillion dollars. I know you're sleepy, but stay with me here. $1 trillion is about the same as the GDP's of Canada and Mexico combined. So can you imagine all these Japanese housewives lined up at post offices with their savings books, asking for over 20% of Japan's GDP...in cash? "Okane wo misete kudasai" (Show me the money) Now, the question is...where is the money? Obviously the money is "invested." The problem is that much of it is "invested" in what are called "special corporations." Special corporations are businesses set up by the government bureaucrats to be run by former and retired bureaucrats. It is estimated that these special corporations have lost over $500 billion by allowing retired bureaucrats to pretend to be businessmen. The Japanese government plan is to "hope" only half of the people want their money. Then perhaps they can sell $500 billion of more bonds to pay for the redemption of the first bonds. Bond prices could skyrocket for such a scheme. If that isn't enough, consider that next year companies are required to report the status of employee retirement funds. Currently, Japanese companies are not required to disclose this information. Many very large companies do not have the abiity to meet their pension obligations to Japanese baby boomers who devoted their lives to companies in exchange for their retirement money. The disclosure of corporate pension shortfalls could provoke 75% or more of Postal Savings investors to cash in their time deposits at maturity. There just isn't enough money to cover that scenario. I have never been able to visualize a scenario that would prompt Japan to sell it's massive holdings of U.S. Treasury Bills. I'm starting to see a scenario now. www2.gol.com VERY INTERESTING ARTICLE AND OTHER WEB SITES -- WALT Freeus

To: John Hunt who wrote (5879)	5/31/1999 9:26:00 PM
From: C.K. Houston	Respond to of 9818

"How bad a bump in the road is, depends on what you're driving." ------------------------------------------------------------------------------- Excerpts from recent Senate hearing: SENATOR BENNETT: ... One of the questions I am always asked is, ‘Well, what are YOU gonna do?' ... I have already purchased a 55 gallon drum which I will fill with water, long before the end of the year, so I won't have to be out there purchasing emergency supplies at the end ... One of the things that I'm saying that fortunately got picked up on ‘60 Minutes' ... I say, ‘Yes, it looks as if overall, the country is gonna come through this in pretty good shape, and that will be of no comfort whatsoever to you if you live in the community that doesn't.' ... I say, ‘Don't depend on the United States Senate to solve your problem for you. Take charge of your own Y2k problem and ask the questions where you live.” Again, no comfort to you if the national power grid is up, but your power company is down ... I gave this speech in a rural Utah town--standard exhortation--I said, ‘Take charge of your Y2k problem yourself. Check with the local bank where you bank. It's of no comfort to you if I tell you the national banking system is going to work, if your bank doesn't work. Call the mayor. Find out if your water purification system is gonna work,' and so on. After the meeting was over, a fellow came up to me, introduced himself and he said, ‘I'm the mayor.” (LAUGHTER) I said, ‘Well, you're getting a lot of phone calls tomorrow,' and he said, ‘Yeah!' I said, ‘Is the water purification plant in this city gonna work?' He said, ‘I don't have the slightest idea, but I'm going to find out!' And that of course is the message. Don't depend on a national assessment of where we're going to be. Focus on your community and your situation and your lifetime. There's been some criticism--I guess it's probably justified--that at one point I did use the phrase, ‘We've now solved this to the extent that nationally, it's going to be a bump in the road,' and somebody said, ‘How can you say that in view of the other comments you've made?' A member of the staff saved me. He said, "How bad a bump in the road is, depends on what you're driving." "If you hit a bump in the road in a small two seater sports vehicle at 60 miles per hour, it can throw you out of the seat and into the side of the road and can produce very serious injury. On the other hand, if you're going over a bump in the road in an 18 wheeler, at maybe 30 miles an hour, you don't notice it that much." So each of you must take charge of your own Y2k situation and see how you survive where we are. FULL ORAL TESTIMONY (INCLUDING Q&A): greenspun.com Excellent reading. Cheryl