>No, I'm an unemployed socialist (the bottom >really fell out of the market
>for socialists in the late 80's).
Who employed you to be a socialist in the first place?
> I'm cautious, therefore, about the
>Japan-as-socialist-nirvana argument made >popular by our own Comrade
Redmond
>and others.
Rad Redmond and I don't always agree--I think he's read a few too many one thesis books on 'how Japan really works'--but I never got this from him.
>I see Japan as a thoroughly bourgeois state >that only seems otherwise
because it has a >high level of social cohesiveness. It's not that
>social cohesiveness is anything to sneeze at, I >just don't think it's a
durable as a legal system >that anticipates and copes with conflict.
I see it as a far more diverse society than most think with a population of 126 million people, most of whom are working class (in the sense Joanna says). There is a communist party here and there is a reformed, used-to-be socialist party here. Both, contrary to what the LDP says, would be capable of running a Japanese government (they would at least know how to get along with the bureaucrats), so, unlike any left party in the US, are true parties in waiting. Of course, the US is not enthusiastic about this at all, since both would be very much against the US bases (though it would the communists who pushed the point).
> I think Japan is far behind the US in the >process towards completing the
capitalist
>revolution.
It's through and through a business-oriented society. It does look like US-dominated globalization is leading to something far less propsperous. Europe is headed in the same direction, too, I think. Carlyle Group have big plans for Italy (and Hakki, if you are following this, TURKEY TOO!).
Some of us would just like to see retail and banking co-ops survive along with national health insurance and retirement. Oh, yes, and national postal savings and insurance, too.
>I'm a bit fascinated by asset securitization >because I think it represents
>what might be the last stage of the capitalist >revolution. Whether or not
>that's true, I don't se any particular advantage >to the Japanese working
>class in keeping these assets in the hands of >the bank managers that made
>the bad loans in the first place.
In bankers terms, those savings are 'liabilities'. Where would you keep your yen? In gold bars in a security deposit box (which is not insured) or in your mattress?
In fact, many Japanese don't trust their banks; they put their savings in national postal savings and insurance, which Koizumi (with STRONG agreement from Bush and O'Neill) wants to privatize and sell off. One of the issues I've kept coming back to is just the extent of all these bad loans, with or without securitization, but you seem to miss that point. The interests lined up behind Ripplewood, and Lehman and Carlyle (and their revolving door factotums at the WB and IMF) want a very DRASTIC evaluation of the bad loans. There has been no independent analysis here, but everyone in the west just assumes there has.
>After all, who is to blame for the fact
>that these portions of Japanese loan portfolios >are worth ten cents on the
>dollar?
The analysts brought in by O'Neill and by the large equity groups such as Carlyle Group. Surprise, surprise, they are the same people! Am I not explaining something here?
>If they're worth more, why don't the Japanese >banks sell them for more?
There is a large >international market for securitized assets, >after all.
There is no ONE reason why. First, there is no nationwide liquid market in loans, securitized or not, though it's starting to be put in place. Second, many of the bank analysts insist the loans will pay at acceptable levels and are deadset against such junk evaluations of their portfolios. Often what is happening is that anecdotal evidence at one particularly awful bank is used by the western analysts to project it onto the entire system.
The biggest problem is still the deflationary economy, which has to be linked to the overly strong yen created by US policy after the Plaza Accords (which the Europeans loved as well).
>Moreover, I think you misunderstand the effect >of loan securitization.
American banks, such as >JPM, absolutely live to securitize and >syndicate
their loan portfolios because it >spreads risk, frees reserves for further
>lending, and trades uncertain interest income >for definite service and
underwriting income.
So did Enron by the way. Mismanagement of securitization has been linked to the failure of three midwest banks recently (I have text of Congressional testimony if you want to see it). Again, I didn't say creating more liquidity for buying and selling the loans is necessarily a bad thing. This is the advantage of securitization. Interests will buy loan packages so long as they know they can always sell them, too.
>There's no harm to Japanese banks in >securitizing their loan portfolios
unless they >sell them for too little and I'm not sure
>what your evidence is that they will be forced >to sell them to particular
buyers for too little.
My evidence is what has already happened to banks forcibly declared bankrupt by the government under the advice of 'analysts' from Lehman Bros, and S& P, and Moody's (who rated Enron a hold or buy right up to one month before the bankruptcy).
This is why the valuation of the loan portfolios is key. There is no science here, just personal greed and self-interests.
When a bank is forced into bankrupty the loans are given away, we are not even talking ten cents to the dollar here. Again, is there something I'm not making clear here? Check out the Ripplewood Holdings takeover of Long Term Credit, pretty much paid for by the Japanese taxpayers.
> Billions of dollars in asset-backed securities >are bought and sold every
day by all sorts of >institutional money managers.
Yeah, check out www.enroncredit.com (it's still up and running btw, and offers many fascinating insights into US corporate new economy culture). Oh, maybe you were a socialist at Enron yourself before you got unemployed?
>Finally, I'm not sure how stocks enter into this >picture. Aren't we
talking about loan-backed >securities here? How are we "lending money >to
GE or Tyco and waiting for the price of the >stock to go up again" ?
You are the one who made the remarks about savings and investing. My point was that too many Americans seem to be confused about the difference. You can see this when they open a savings and checking account with their mutual fund. There are other connections here. If you don't know or want to deny how GE or Tyco use all sorts of things like 'asset securitization' to hide debt, then either you are one naive socialist or the troll I thought you were from the beginning.
Let me conclude with this: I'm not saying there aren't a lot of bad loans. I am saying that it is too often in the interests of the analysts to make them sound far worse than they are. I'm not saying creating a liquid market including securitized loan assets is necessarily bad. I am saying when people like Bush and O'Neill feed the panic about Japanese loans and push Koizumi into doing drastic things, they are really working for their own investment portfolios. And when the president of the number one political economy can do that to the number two, it's an 'axis of venality'. The USA is clearly the world's superpower in crony capitalism.
Charles Jannuzi