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I believe the banks in Japan also refuse to lend money to any but the AAA
credit-rated companies because of the debt they hold. And many of the large
companies have substantial amounts of debt themselves. The debt was caused
by both the demographic factors already mentioned and by the real estate
bubble. Seems like there should be great opportunity over there for foreign
banks to clean up.
Kent
----- Original Message -----
From: <bruce.larson@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Monday, September 10, 2001 5:00 PM
Subject: [RT] Re: Japan's economic problems
Japan's current economic problems are clearly demographic. Japan has
both one the oldest median age and lowest fertility rate in the
world. No one's consuming and everyone's saving. In 1985, there
were more than twice as many aged 0-14 as there were 65 and up. Now
the 65 and up outstrip the young. This demographic imbalance is
going to get alot worse. The current fertility rate in Japan is 1.4
children per adult female; 2.1 is needed for a stable population.
Even the official forecasters are expecting Japan's population to be
cut in half by the next century. As long as no one's having babies
in Japan and immigration is disallowed, deflation will persist.
Japan's public debt now stands at 130% of GDP. That compares to
about 40% of GDP for the US I believe. The debt load is going to
become even more astronomical as the population gets older and
requires more social services. And soon there'll be no one left to
pay it back. And guess who owns all the debt? The Japanese banks.
--- In realtraders@xxxx, "Earl Adamy" <eadamy@xxxx> wrote:
> Caveat: I do not consider myself to be have much depth of knowledge
> regarding Japan.
>
> I would suggest that Japan has 3 problems at the root of its
economic
> problems: stock market bubble, real estate bubble, and manufacturing
> competition from Asia and China. The later seems to be resulting in
both
> deflation and unemployment in Japan not to mention considerable
trade
> friction, especially with China. (The US is extremely vulnerable to
the same
> set of problems with respect to imports from China and other
countries.) The
> Japanese have typically adapted to international manufacturing
imbalances by
> building factories off-shore. This has worked very well for Japanese
> manufacturers in Asia ex-China, however China's history with Japan
is one
> which has tended to create a less hospitable environment for
Japanese
> manufacturing investment. Thus, heavy imports from China are not
offset by
> strong manufacturing earnings.
>
> I think you are correct that homogeneity has been a two edged
sword ... the
> plus side has been social stability and the minus side has been
ineffectual
> problem solving. By contrast, facing and solving problems when
forced to do
> so, has been a particular strength in the US. There seems to be some
> evidence that Kozumi (sp?) and others may find strong nationalism
to be a
> politically more palatable route than facing the problems. This
could lead
> to friction between Japan and the rest of Asia (particularly China)
and even
> with the US.
>
> Earl
>
>
> ----- Original Message -----
> From: "Daniel Goncharoff" <thegonch@xxxx>
> To: <realtraders@xxxx>
> Sent: Monday, September 10, 2001 7:19 AM
> Subject: Re: [RT] Markets: Stock Index Futures and regulation
>
>
> > Earl
> >
> > I have a different understanding of what has happened in Japan. I
> > thought the drop in Japan was caused by two factors, a massive
real
> > estate bubble combined with a real plateau in manufacturing. Only
when
> > the bubble burst did it become clear that the real economy was
> > deteriorating, and it never found a bottom.
> >
> > I also think the Japanese would disagree that their homogeneity
is a
> > strength -- they are starting to come to the opinion that it is
the
> > reason they 'can't get up'. There is no way to dispose of old
baggage...
> >
> > As for 1929, I think the similarities are there. Raw material
producers
> > have been struggling with deflation. The 'popular' (populist?)
view
> > seems to favor less globalisation rather than more. There is no
specific
> > global military threat, so the developed countries have more
incentive
> > to fight over differences rather than smooth them over. Traumatic
events
> > (by definition?) come when you don't expect them.
> >
> > Regards
> > DanG
> >
> > Earl Adamy wrote:
> > >
> > > Rakesh,
> > >
> > > As a trader I use technical analysis exclusively. My bias toward
> technical
> > > analysis carries into longer term investing except when I
believe there
> are
> > > extreme conditions in the market. I also have long had an
interest in
> long
> > > term market history because I do believe that there are lessons
to be
> > > learned from history and that markets move from one extreme to
another
> and
> > > back. However first and foremost in trading and investing is
capital
> > > preservation. Thus I was a couple of years early in starting to
ease out
> of
> > > equity investments and I may be a couple of years late in
easing back
> in.
> > >
> > > I believe that there are many similarities between the current
US market
> and
> > > both the Japanese and post-crash (29) US market. There are also
many
> > > differences ... one is the dependency of the US economy on
services (the
> > > Japanese and 29 economies were manufacturing based) and another
is the
> more
> > > homogeneous social makeup of the Japanese society. The later is
> significant
> > > because the Japanese (and to a lesser degree European) social
orders are
> > > less driven by free wheeling capitalism which I believe has
been carried
> to
> > > an extreme in the US and (particularly in Japan) the
homogeneous society
> has
> > > eased the financial pain of depression. Never-the-less there is
a
> creative
> > > and free wheeling spirit here which should not be
underestimated because
> it
> > > has proven itself capable of adapting to (and leading)
tremendous
> challenge
> > > and change for several centuries.
> > >
> > > Still, in my mind, the excesses have been carried so far over a
period
> of
> > > decades that there must be a long/steep corrective period. The
pain will
> > > happen ... it is up to those attempting to manage the economy
whether
> the
> > > correction will be long or will be deep. In the US I would add
that
> there
> > > has been a general preference for the public rather than
business to
> take
> > > the brunt of economic pain e.g. the banks are profiting
handsomely on
> rate
> > > spreads while the public is paying relatively high rates for
credit.
> > >
> > > All selling machines are always in gear and Wall Street is no
exception.
> > > When sales slow and inventories pile up at car dealers you
don't hear
> them
> > > running negative advertising, neither does Wall Street. The
astute
> investor
> > > will take some independent measures and reach conclusions
independent of
> the
> > > hype.
> > >
> > > As for investing in a major turn in the markets, on technical
basis I
> will
> > > need to see weekly charts with well established bullish trends
> (particularly
> > > good looking, bullish linear regression channels) and on a
fundamental
> basis
> > > I want to see companies with strong market positions, honest
accounting
> and
> > > good values in the stocks in which I invest ... this requires a
major
> mind
> > > shift from investing in markets which are already in a steadily
rising
> bull
> > > market.
> > >
> > > What I really expect to see is the time come when absolutely no
one
> wants to
> > > own stocks (this last happened in the 30's and 40's) and that
is when I
> > > expect to start shopping for real bargains with real earnings
and real
> > > dividends. In the interim, I continue to like bonds and believe
they are
> > > probably a double over the next 5-10 years (look at the history
of
> interest
> > > rates in the 30's and modern Japan). I remain undecided on
currency
> issues
> > > because I think the issues are more degrees of pain rather than
a safe
> > > haven. If world economic woes bring a rise in nationalism and
> > > political/social dislocation (I think this is a good
possibility), arms
> > > makers may lead an economic rebound.
> > >
> > > More than anything else, one must continuously observe
(independently of
> the
> > > media), think, and adapt to conditions as they unfold.
> > >
> > > Earl
> > >
> > > ----- Original Message -----
> > > From: "Rakesh Sahgal" <rsahgal@xxxx>
> > > To: <realtraders@xxxx>
> > > Sent: Sunday, September 09, 2001 8:08 AM
> > > Subject: Re: [RT] Markets: Stock Index Futures and regulation
> > >
> > > > Earl,
> > > >
> > > > In your write up on the prospects for the economy in your
country you
> have
> > > > primarily relied upon fundamental concerns(if I understand you
> correctly)
> > > > which are coming to the fore now, rather being touted by the
salesmen
> of
> > > > Wall St. now when the markets have already tanked.
> > > > These factors were not being cited by Wall St. gurus and their
> underlings
> > > > globally earlier on, when the markets were touching the skies.
> > > > Cant one infer from these shenanigans that "they" have
exhausted
> > > > inventories and and are now re-stocking or is this assumption
> erroneous?
> > > > This I ask in light of the fact that sooner than later the
easing
> > > > liiquidity conditions will make themselves felt in the
economy. Also
> how
> > > > relevant are the comparisons of the U.S economy with the
Japanese
> economy
> > > > with their structural differences( or am I again ignorant of
the
> > > similarities)?
> > > >
> > > > Once Ira had posted that the Wall St. selling machine always
finds
> > > > stories/concepts to tout after the current rage is dead and
buried.
> Are
> > > you
> > > > saying that the conditions are going to be so dire that the
markets
> are
> > > not
> > > > going to reward performance and/or the prospects of
performance of the
> > > next
> > > > great "find"?
> > > >
> > > > You further state in your message below, that you are
willing to
> change
> > > > your analysis contingent upon contrary evidence emerging.
Given your
> very
> > > > strong views what would you term conclusive evidence keeping
in view
> the
> > > > fact the charts will essentially lead the economy and
corporate
> > > > performance? Would you wait for confirmatory economic data
and enter
> the
> > > > markets on pull backs in the new trend or trade major support
> > > > points/projections with stop losses?
> > > >
> > > > Look forward to your comments.
> > > > Regards.
> > > >
> > > >
> > > > Rakesh
> > > >
> > > >
> > > > At 08:06 AM 9/8/01 -0600, you wrote:
> > > > >Yes, that was a typo, I was referring to the introduction of
single
> stock
> > > > >futures. I do not disagree with your observations as they
relate to
> > > current
> > > > >market conditions. My comments are directed toward conditions
> existing in
> > > a
> > > > >major cyclical bear market of the type and scope we have not
seen for
> > > nearly
> > > > >a century. Should those conditions emerge, I believe that the
> enthusiasm
> > > > >for, and regulation of, derivatives will change markedly.
> > > > >
> > > > >I should, perhaps, add a few caveats regarding my opinions.
I am
> > > personally
> > > > >extremely bearish in my view of the equity markets for the
next
> decade.
> > > This
> > > > >is reflected in the fact that my investments have been 100%
in long
> term
> > > > >treasuries and bond funds for well over a year now and I am
even now
> > > > >completing the process of switching bond funds (most of
which contain
> > > GSE's
> > > > >and corporates) for treasuries. Futures trading is another
matter, I
> > > don't
> > > > >care if the market goes up or down as long as it does one or
the
> other,
> > > > >preferably in a trending manner. Finally, my investment hat
is in no
> way
> > > > >married to the bear case should strong evidence emerge to the
> contrary,
> > > > >however I am in no way interested in trying to time my
investments to
> > > catch
> > > > >the absolute bottom in this market.
> > > > >
> > > > >Earl
> > > > >
> > > > >----- Original Message -----
> > > > >From: <I4Lothian@xxxx>
> > > > >To: <realtraders@xxxx>
> > > > >Sent: Saturday, September 08, 2001 7:32 AM
> > > > >Subject: Re: [RT] Markets: Stock Index Futures and regulation
> > > > >
> > > > >
> > > > > > Earl:
> > > > > >
> > > > > > With all due respect, stock "index" futures have been a
huge
> success.
> > > I
> > > > > > believe you wish to be skeptical of single stock
futures. And
> given
> > > then
> > > > > > attendance and interest shown by the futures and
securities
> industry
> > > this
> > > > > > week at a seminar in Chicago by the Futures Industry
Association,
> I
> > > beg to
> > > > > > differ with your conclusion.
> > > > > >
> > > > > > Single Stock Futures, in my opinion, will be the single
largest
> new
> > > > >product
> > > > > > we have ever seen introduced. There will be three
exchanges in
> the
> > > U.S.
> > > > > > offering them, a very aggressive and with it Nasdaq-
LIFFE, the yet
> to
> > > be
> > > > > > named but formidable Chicago Joint Venture of the
CBOE/CME/CBOT
> and
> > > the
> > > > >just
> > > > > > announced AMEX. What product have we had launched by
three
> exchanges
> > > all
> > > > >at
> > > > > > the same time?
> > > > > >
> > > > > > Keep in mind that the banks wanted nothing to do with the
CBOT
> when
> > > they
> > > > > > launched the bonds. Six months later they were knocking
down the
> > > doors
> > > > >for
> > > > > > memberships and floor space. Look at the influence of
stock
> volumes
> > > from
> > > > > > tine introduction of options trading in the 1970s and
stock index
> > > futures
> > > > >in
> > > > > > the 1980s. Volume took off and never looked back.
Nearly 1/3 of
> the
> > > > >weekly
> > > > > > NYSE volume comes from program trading alone.
> > > > > >
> > > > > > The new single stock futures will offer tremendous
capital and
> > > operational
> > > > > > efficiencies to some of the largest players in the
industry. No
> more
> > > > >waiting
> > > > > > t+3 for stocks to settle. Same day settlement. Marked
to the
> market
> > > at
> > > > >the
> > > > > > same clearing house, the OCC, for all the single stock
futures and
> > > options
> > > > > > trading. Same clearing house for settlement and delivery
of
> options
> > > and
> > > > > > futures contracts.
> > > > > >
> > > > > > Take then that the biggest corporate names in the world
are U.S.
> > > companies
> > > > > > that can be traded as SSF. Take then that the U.S.
capital
> markets
> > > are
> > > > >the
> > > > > > best in the world in terms of legal certainty, regulation
and
> > > fairness.
> > > > > >
> > > > > > These are all parts of the equation why single stock
futures will
> > > work.
> > > > >Will
> > > > > > they take volume from stocks? Yes and no. That same
argument was
> > > made
> > > > >when
> > > > > > options and indexes were introduced and they only added
to the
> > > liquidity
> > > > >of
> > > > > > the market. With the movement of time we have been able
to
> introduce
> > > > >better
> > > > > > and better contracts to specifically meet the needs of
traders,
> > > hedgers
> > > > >and
> > > > > > investors. We no longer need to run into gold or
soybeans to
> hedge
> > > our
> > > > > > inflation or deflation risk. These tools will only make
what
> people
> > > want
> > > > >to
> > > > > > do, and do, more efficient.
> > > > > >
> > > > > > And I for one and going to do my best to make sure they
will be
> > > > >successful.
> > > > > > Part of the reason I write my daily industry newsletter
is to help
> > > people
> > > > >in
> > > > > > the futures and securities industry manage the changes
all around
> us.
> > > Just
> > > > >in
> > > > > > the last week I have had a President and CEO of a U.S.
exchange
> sign
> > > up
> > > > >for
> > > > > > the letter. A Senior Vice President of one of the Chicago
> exchanges
> > > > >signed
> > > > > > up. A large division of a clearing FCM will shortly be
announcing
> > > they
> > > > >are
> > > > > > going to license my letter to offer to their clients and
to
> attract
> > > new
> > > > > > clients. They will be offering it at a single stock
futures
> > > newsletter.
> > > > > >
> > > > > > So, all the signs I see say that these new products are
going to
> work.
> > > > >And
> > > > > > as the Nasdaq-LIFFE said, they are going to "make" them
work. I
> have
> > > > >never
> > > > > > seen an exchange so confident, so focused on the good of
the
> customer,
> > > so
> > > > > > focused on offering a level playing field for all
participants as
> the
> > > > > > Nasdaq-LIFFE. And I believe them.
> > > > > >
> > > > > > Regards,
> > > > > >
> > > > > > John J. Lothian
> > > > > >
> > > > > > Disclosure: Futures trading involves financial risk, lots
of it!
> John
> > > J.
> > > > > > Lothian is the President of the Electronic Trading
Division of The
> > > Price
> > > > > > Futures Group, Inc., an Introducing Broker clearing Man
Financial
> Inc.
> > > > > >
> > > > > >
> > > > > >
> > > > > >
> > > > > > In a message dated 9/8/01 7:17:41 AM Central Daylight
Time,
> > > > >eadamy@xxxx
> > > > > > writes:
> > > > > >
> > > > > > << I doubt that stock index futures are going to get very
far off
> the
> > > > >ground.
> > > > > > Essentially, stock index futures (low margin and high
leverage)
> are
> > > the
> > > > >last
> > > > > > nail in the coffin of post-29 market regulation. I
believe that
> we
> > > are in
> > > > > > the early stages of a major cyclical bear market and I
expect to
> see
> > > > >stock
> > > > > > market volumes diminish to levels not seen in decades as
a
> byproduct
> > > of
> > > > > > severe price declines ... the pendulum always swings
from one
> extreme
> > > to
> > > > >the
> > > > > > other. I further expect that liquidity in the futures
and options
> > > markets
> > > > > > will suffer.
> > > > > >
> > > > > > I find it especially ironic that the post-29 market and
banking
> > > > >regulations
> > > > > > were removed just as the markets moved to such excess.
The fact
> that
> > > > >these
> > > > > > regulations were seen to be inhibiting the upward move
of the
> markets
> > > > >should
> > > > > > have been a warning rather than a reason to remove the
> regulations.
> > > > > >
> > > > > > Earl >>
> > > > > >
> > > > > >
> > > > > > To unsubscribe from this group, send an email to:
> > > > > > realtraders-unsubscribe@xxxx
> > > > > >
> > > > > >
> > > > > >
> > > > > > Your use of Yahoo! Groups is subject to
> > > http://docs.yahoo.com/info/terms/
> > > > > >
> > > > > >
> > > > > >
> > > > >
> > > > >
> > > > >
> > > > >To unsubscribe from this group, send an email to:
> > > > >realtraders-unsubscribe@xxxx
> > > > >
> > > > >
> > > > >
> > > > >Your use of Yahoo! Groups is subject to
> http://docs.yahoo.com/info/terms/
> > > >
> > > Rakesh
> > > > Sahgal
> > > >
> C
> > > > -165(1st Floor), Greater Kailash - I,
> > > >
> > > New
> > > > Delhi - 110 048
> > > >
> > > India.
> > > >
> > > Tel.:
> > > > 91-11-647-6462,91-11-643-0010
> > > >
> > > eMail:
> > > > rakeshsahgal@xxxx
> > > >
> > > rsahgal@xxxx
> > > >
> > > >
> > > > Rakesh Sahgal
> > > > Online Status:
> > > >
> > >
> <http://eudora.voicecontact.com/vc3/index.html?rakeshsahgal%
40eth.net><http:
> > >
> file://eudora.voicecontact.com/vc3/index.html?rakeshsahgal%
40eth.net><http://www.
> > > eudora.com/products/voicecontact/>
> > > >
> > > >
> > >
> > >
> > > To unsubscribe from this group, send an email to:
> > > realtraders-unsubscribe@xxxx
> > >
> > >
> > >
> > > Your use of Yahoo! Groups is subject to
> http://docs.yahoo.com/info/terms/
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxx
> >
> >
> >
> > Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> >
> >
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