> The cross-holdings have traditionally functioned as financial
> hostages and were stabilizing, but they've become a source of
> instability as prices have cratered.
No, the crossholdings have worked remarkably well. The Nikkei at 9000 still means that total market capitalization is somewhere around 65% of Japanese GDP -- comparable to the EU. The US figure is still somewhere around 115% or so, I think, implying that there's plenty of room for the Dow to fall further.
More to the point, Japan's economy does *not* depend on the stock market for savings or investment or consumption, unlike the US, where bear markets immediately wound elite psychology, and chill the animal spirits of Gates & Co. But Asiazilla has liquid oxygen running through its veins, among other interesting compounds, and will survive Wall Street's Bubble blowout quite nicely. (Remember, I said 30 years -- not 3 months).
-- Dennis