Events related to the Crash

• Zimbabwe's diesel shortage has rendered the production from its mines highly unpredictable. It seems that the 50% skim of hard currency from the mines for NOCZIM and ZESA, while approved of by the mines, is clearly not enough to stabilize these two government monopolies.
• Japan's manufacturing output rose by 0.9% -- consensus forecast growth was 3.0%, while Japan's Ministry of International Trade and Industry had forecast 3.6% growth. This is a very serious qualitative error.

• It is becoming clear that Japan's macroeconomy is recovering only in sectors that can export. Personal consumption is still declining.
• Natalya Kagalovsky is suing the Bank of New York for suspending her without cause as a result of investigating the ROCML Scheme@BNY. There are still no formal charges against her in any court, so this may be interesting. Lawsuits are expected in Russian, U.S., and U.K. courts. She is married to Konstantin Kagalovsky, who does have charges against him....
• German Finance Minister Hans Eichel has said, "It is impossible that the United States is trying to tell us who the European candidate should be." Apparently, it is political suicide for Germany to back down on its nomination of Caio Koch-Weser.

• The United States has rejected the EU's candidate for leading the IMF (Camdessus left two weeks early): German Deputy Finance Minister Caio Koch-Weser. The driving consideration overtly is a lack of credibility with the Third World nations. The United States still prefers a European candidate (in particular, the United States is not ready to support Stanley Fischer, a native of Zambia who is a naturalized American). The Third World nations, out of frustration with the EU, have nominated Stanley Fischer. Japan has nominated "Mr. Yen", but it is unclear how long he will remain nominated....

• A tentative solution to the Malaysia-Singapore CLOB problem has been agreed to by both stock exchanges. Two of the seven prior proposals have been modified, and will be used in parallel.
• Effective Capital Sdn Bhd's buyout proposal was accepted with improvements. Namely: Share freeze reduced to three months from four months; releasing the shares on a staggered basis over thirteen months, rather than five to eighteen months; and an admin/transaction fee of 1.5% based on Feb. 15 prices rather than 2% based on Dec. 22 prices.
• 33 months after the close of Effective Capital's offer [March 31, 2000], the backup plan cuts in: direct release of the remaining CLOB shares onto the Malaysian KLSE over a span of nine months, with an administrative fee of 1% based on the average of the prices of the last five days in the thirty-first month after Effective Capital's offer closes.
• SIAS [Securities Investors Association (Singapore)] did not have a response immediately available.
• Japan is trying to explain away why a general price decline is not indicating a restart of macroeconomic recession. The explanations are starting to make sense now: the recent strengthening of the yen should influence import prices enough to skew the figures in the food and energy sectors.
• It appears that Bolivia is on-track regarding its macroeconomy. The IMF's commentary simply indicates how serious Bolivia's situation is.

• Japan's trade surplus shrank 30.7% to ¥522.6 billion [i.e. U.S.$4.75 billion] in Jan. 2000 compared to Jan. 1999. I presume this figure is officially reported in yen. This shrinkage is mostly due to increased value of imports, which is some combination of macroeconomic recovery and remarkably high oil prices [about triple what they were last year at this time?].
• Warren Buffet lost a regulatory ?? to the U.S. SEC to temporarily defer disclosure of stock holdings in his fund, Berkshire Hathaway [currently near a 2-year low; it traded in the afternoon at 48,800, down 200].
• In particular, Berkshire Hathaway had a $16.9 million stake in Microsoft preferred class A shares Oct. 1, 2000 -- which was entirely sold off by Dec. 1, 2000.

• Zimbabwe's President Mugabe is seriously considering reintroducing price controls on basic commodities at an indefinite date.
• Zimbabwe's annualized inflation fell to 55.9% in Jan. 2000; this is the third consecutive month of decline. Technical factors are blamed.
• Ecuador's Congress met to discuss the "dollarization" plan initiated by Jamil Mahuad and continued by Gustavo Noboa. The initial meeting was 64 out of 123; 80 votes are needed to pass. Noboa thinks he already has the 80 votes required to pass the bill. Noboa labeled the bills as "urgent": if they are not passed (in some modified form) by Mar. 14, 2000 (inclusive or strict?), the bills will go into effect in their original wording as submitted to the Congress by Noboa.

• Zimbabwe has defaulted on loans to the United States, Britain, Finland, Sweden, and the European Investment bank. Also, Zimbabwe is having difficulties finding the money to meet debt commitments to the IMF and the World Bank. Britain's Export Credit Guarantee Department has recovered 1 million of 1.7 million pounds of arrears, however.

• Moody's Investors' Service is considering cutting Japan's sovereign rating again. The last cut was in late 1998, from AAA to Aa1. According to a nameless analyst, there is no possibility of default.
• The U.S. House Banking Committee is subpoenaing Lucy Edwards and Peter Berlin in an effort to determine whether illegal capital flight was responsible for the collapse of the Russian economy. The U.S. House Banking Committee also wants to know whether the ROCML Scheme@BNY is an isolated incident, or an example of something endemic to international banking.

• Japan's Economic Planning Agency is trying to explain why a second quarter of GDP contraction in a row (the Oct.-Dec. 1999 quarter) is not a recession (which it technically is).

• Lucy Edwards and her husband Peter Berlin went from London to New York to surrender to U.S. Federal Authorities, and have pleaded guilty. They accepted $1.8 million in exchange for setting up a banking network that cleared at least $7 billion in transactions that were a combination of Russian tax evasion, Russian customs evasion, and money laundering. Bond was set at $500,000 each: land and passports were used to satisfy the bond.

• South Africa corrected its newspapers on the nature and content of discussions that were held with Zimbabwe. Namely, Zimbabwe's involvement in supporting the Congo vs. Zaire was not brought up, and neither was an 800 million rand loan (or any loan) even proposed, let alone committed to.

• Daewoo is sending out circa ten invitations to its auction. General Motors, Ford, DaimlerChrysler, and Hyundai are thought to be among those invited to bid.

• The Securities Investors Association (Singapore), which represents about 50,000 of the 172,000 investors whose CLOB shares are still frozen by Malaysia, have set up a legal fund for the express purpose of suing the Kuala Lumpur stock exchange under Malaysian law.

• The Bank of Korea reacted to a 5% spread between short-term and long-term rates by raising its target for the overnight call rate to 5% from 4.75%. The Bank of Korea would prefer a spread of about 3%, and does not believe inflation is a serious threat yet.
• Russia is planning to negotiate with the London Club over $32 billion in debt owed to commericial banks. Earlier talks stalled in Dec. 1999: London Club held out at 35% forgiveness, while Russia stopped at 40% forgiveness. These talks are expected to bog down if not completed before the Paris Club talks start (last half of 2000). They are due to begin at DeutscheBank's headquarters in Frankfurt, Germany.

• Japan's Financial Reconstruction Commission has authorized the buyout of Long-Term Credit Bank by the Ripplewood consortium, i.e. "New LTCB Partners"
• The Ripplewood consortium includes ABN Amro and Deutsche Bank. Part of the deal includes the Japanese government boosting LTCB to a 13% capital ratio.

• Ecuador's Finance Minister Jorge Guzman announced that the government would gradually undo a freeze on bank assets imposed March 1999(?).
• 90% of the assets are to be unfrozen. The balance will be paid back in dollar-denominated 3- to 5-year bonds. The unfreeze is stated to happen on Mar. 11, 2000.
• U.S.$4000 will be immediately available, with the balance paid in the aforementioned bonds. Deposits in banks that had to be closed will be paid back in installments starting Feb. 20, 2000.
• Brazil's GDP grew by 0.82% in 1999. The Brazilian Geography and Statistics Institute [IBGE] is diverging from the Brazilian government with its GDP growth forecast for 2000. The Brazilian government is forecasting 4%, while IBGE is forecasting 3%.

• The Bank of New York has responded to the ROCML Scheme@BNY by creating an Anti-Money Laundering Committee that specifically reviews accounts for suspicious activity. The current upper bound on the money involved is $7 billion (35% of Russia's foreign exchange deficit for 1998). In an agreement filed with the Fed, the Bank of New York has 45 days to devise "an enhanced due-diligence program" to spot problematic account activity, and also file a list of accounts that do not need monitoring. Questionable activity is to be reported quarterly.
• The IMF has declared Kenya's reduction in corruption and tightening of fiscal policy encouraging, but not yet sufficient to justify resuming lending to Kenya.

• The IMF approved the funds for the second year of Bolivia's economic reform program.
• Bolivia, Uganda, and Mauritania are due to be qualified for an internationally-sponsored "enhanced highly indebted poor countries' initiative".

• The IMF revised its estimate of Thailand's macroeconomic growth for 2000 from 4% to 5%. Thailand's estimate is 4.4%. Also, Thailand plans to repay the first tranche (U.S.$1.63 billion) of IMF loans it took out during 1997 and 1998.

• An information leak reported that Brazil's President Cardaso will not bail out Minas Gerais' Eurobonds (which are due on February 10, 2000). This may be political retaliation for Minas Gerais' governor (Itamar Franco) initiating Brazil's currency collapse by declaring a debt moratorium on Minas Gerais' debts in Jan. 1999. However, it is not certain that Minas Gerais will default. Itamar Franco thought it was probable on Jan. 25, 2000 -- he announced the possibility then.
• The Consultative Group on Indonesia (which includes the World Bank, Asian Development Bank, and donor countries) has pledged U.S.$4.7 billion to Indonesia, conditional on Jakarta's commitment to democracy and human rights. U.S.$500 million is grants that do not have to be repaid. If the IMF (not part of the Consultative Group on Indonesia) may also pledge U.S.$300 million.

• February 29, 2000 [the leap day] is expected to boost Japan's Feb. 2000 consumption figures because the system Japan uses to measure it does not compensate for the leap day. This is creating the potential for a statistically-induced boost of 2% to 3% in these statistics.

• In the latest round of the discussions between Malaysia and Singapore over how to unfreeze the shares formerly traded on the Central Limit Order Book [CLOB], the two sides disagree over the results of the negotiations.
• "The Kuala Lumpur Stock Exchange said late Monday that both it and the Singapore Exchange accepted Malaysian company Effective Capital's proposal to buy the shares." However, the Singapore Stock Exchange proceeded to directly contradict this statement.
• One currently-unresolved difficulty is that it is formally Malaysian-illegal for the shares of those investors not agreeing to the buyout to be transferred to Malaysia's Finance Ministry for safe-keeping.
• Obviously, it is informally Malaysia-legal because it is the government doing it. However, there has been no reported effort to cite (or pass) the legislation that formally permits this...for at least six months.

• Japan's unemployment rate rose to 4.6% in Dec. 1999, compared to 4.5% in Nov. 1999. This is viewed more as a side effect of more people entering the work force, than an actual problem. However, it does coincide with a fall in government spending....