Enron Mail |
---------------------- Forwarded by Leann Walton/NA/Enron on 10/26/2000 10:47
AM --------------------------- From: Darren Delage@ENRON on 10/16/2000 02:53 PM ZE9 To: Maureen Raymond/HOU/ECT@ECT cc: Subject: Magic 15,000 level on Nikkei Maureen, Hope all is well .Thank you for your coverage last week. I certainly appreciate the value-added that you provide in your research.I had a quick question for you regarding any anticipated Japan central bank intervention at the 15,000 level in the Nikkei. If I am understanding the mechanism correctly, BIS reserve requirements fall below certain threshold and banks can no longer lend money and meet BIS lending criteria due to improper reserve base. And this roughly happens at 15,000 level? Reason I ask is Goldman Sachs put out an article suggesting that break-evenpoint for bank holding of stocks is roughly 12,000-12,500 a different index level than the one you have mentioned. I can appreciate the difference between reserve liquidity and actual break-even on equity positions, but just wanted to clarify this point with you, as we are trying to gain a complete understanding of how a trigger would effect Japanese capital markets. And so, as I currently understand it, there are (2 ) trigger levels to watch: 15,000 where banks fail BIS criteria and hence cannot extend new loans with BIS stamp of approval. Clearly ctl bank would have incentive in restoring this or else financial system would be thrown into turmoil. 12500 where banks begin to take an actual loss on equity holdings Is this right? Thanks Maureen, take care, Darren
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