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Dogs and Demons :: Керр Алекс
Страница: 68 из 270One of the busiest mole games played by MOF goes by the name of the Bankof International Settlements. BIS, the world's central banks' central bank, prescribes that banks must maintain a minimum «capital adequacy ratio» of 8 percent of capital to outstanding loans. This means that in order to lend $100,1 need to have at least $8 of my own money as supporting capital. If a bank's capital falls too low, it will face restrictions on its international lending ability.
The Japanese mole game began in the early 1990s, when stocks began to fall. Banks, which own large stock portfolios, found their BIS ratios sinking below the 8 percent cutoff point, so MOF ordered insurance companies and pension funds to buy stock to support the market, pounding the BIS mole back into its hole. But soon other moles were popping up in unexpected places: insurance companies and pension funds, after years of investing in low-yield stock, are receiving near-zero, or even negative, returns on their assets. Save the stock market, and you bankrupt the pension funds and insurance companies. Relieve them, and the banks have to curtail international lending. Allow the Nikkei to fall below 10,000, and P/E ratios would return to health, attracting domestic and foreign investors, but at that level it would no longer be possible to pretend that the banks are solvent-and belief in the system is the keystone that props it all up. So, on goes the mole game, fast and furious.
One unexpected consequence of the Bubble was the discovery that Japan's financial community was becoming irrelevant to the developed world. The barriers raised by MOF were so high that when the crash came, others could hear the sound of crumbling columns and smashing glass, but it had very little impact on local economies elsewhere. Japan lost more money than any nation had ever lost in all of human history, from the Sack of Rome to the Great Depression of 1929, but it affected the United States and Europe not a jot, and the bourses in London and New York went on to flourish as never before.
The Ministry of Finance assumed that Japan's national borders are absolute barriers, and within them it did indeed command absolute obedience for decades. But with money now flowing in an instant from one country to another at the news that interest rates have shifted one-tenth of a percentile, old ways of controlling the market no longer work. MOF discovered this when it tried to restrict the futures market in Osaka, only to find that Singapore and Chicago had grabbed the lead in Osaka's absence.
There is one important area in which Japan's financial system may not be globally irrelevant, and this is the nation's enormous dollar holdings.
The Japanese mole game began in the early 1990s, when stocks began to fall. Banks, which own large stock portfolios, found their BIS ratios sinking below the 8 percent cutoff point, so MOF ordered insurance companies and pension funds to buy stock to support the market, pounding the BIS mole back into its hole. But soon other moles were popping up in unexpected places: insurance companies and pension funds, after years of investing in low-yield stock, are receiving near-zero, or even negative, returns on their assets. Save the stock market, and you bankrupt the pension funds and insurance companies. Relieve them, and the banks have to curtail international lending. Allow the Nikkei to fall below 10,000, and P/E ratios would return to health, attracting domestic and foreign investors, but at that level it would no longer be possible to pretend that the banks are solvent-and belief in the system is the keystone that props it all up. So, on goes the mole game, fast and furious.
One unexpected consequence of the Bubble was the discovery that Japan's financial community was becoming irrelevant to the developed world. The barriers raised by MOF were so high that when the crash came, others could hear the sound of crumbling columns and smashing glass, but it had very little impact on local economies elsewhere. Japan lost more money than any nation had ever lost in all of human history, from the Sack of Rome to the Great Depression of 1929, but it affected the United States and Europe not a jot, and the bourses in London and New York went on to flourish as never before.
The Ministry of Finance assumed that Japan's national borders are absolute barriers, and within them it did indeed command absolute obedience for decades. But with money now flowing in an instant from one country to another at the news that interest rates have shifted one-tenth of a percentile, old ways of controlling the market no longer work. MOF discovered this when it tried to restrict the futures market in Osaka, only to find that Singapore and Chicago had grabbed the lead in Osaka's absence.
There is one important area in which Japan's financial system may not be globally irrelevant, and this is the nation's enormous dollar holdings.