Re: RE: Re: Yen still overvalued

["Charles Jannuzi" <jannuzi@xxxxxxxxxxxxxxxxxxxxxxxxx>]

> Since Japanese banks report on a consolidated basis, how would moving
their > assets from a correspondent account in New York to a nostro account
in Tokyo
> help them close their accounts?

I think the issue that people are worried about is money in huge waves being
taken out of North American investments and going back to Japan for some
sort of economic day zero back home (Japan is, afterall, supposed to be a
major creditor to the US's twin deficits, trade and gov't).

You might have two things encouraging this: 1. as I said, a wave of panic
dis-investing in order to pay down debt or prevent foreclosure in Japan and
2. the fact that the fairly constant cheapening of the dollar makes US
investing unattractive (the last year has alleviated this somewhat in
currency terms but it would be hard to say the stock markets have done
much).

I suppose if the stock markets in the US crashed it would mean, in part, the
Japanese money had already left.  If this happened, you could be sure the US
would stand by and let the yen appreciate still further. That seems to be
one thing keeping the money there. Panic disinvesting from the US leads to
panic upswings in the value of the yen.

I don't see how banks could take their deposit liabilities and use them to
write-off bad loan assets. They might use them to increase the capital
adequacy ratio if, at the same time, they were shutting down overseas
operations (as many have). If they couldn't show 8% (I believe it's that
level) using US standards of accounting (whatever that means), they couldn't
even do business in the US. The fact that they are supposed to now show 8%
in Japan as well, combined with problematic and controversial
reclassifications of loan quality and credit risk,  is one of the problems.

Am I missing the points of these questions? I'm certainly no expert on how
banks do business internationally. I have no idea what sort of investments
the banks themselves hold overseas.

It's the US side of things, by the way, that really makes things so
difficult to understand. For example, what is Carlyle Group (or NYC-based
Ripplewood Holdings) ? It's a private equity holdings group that acts as its
own investment bank and consultant while selling these services to others
(including gov'ts); yet it's out of the reach of the SEC and operates
overseas investment funds .

I keep my deposits in a credit cooperative and Japan postal savings.  After
US Prudential took over failed Kyoei (which on the advice of Prudential
demutualized, and, surprise, surprise, who became the number one
shareholder?) here, I took my money out of insurance annuities altogether.

Charles Jannuzi