Events related to the Crash
March 31, 2001 [MyCNN]
- South Korean police were investigating the legality of the Korean Confederation of Trade Unions'
website. This website had recently posted an 'improved' design for a Molotov cocktail -- which
apparently is much more dangerous when tested by the police.
- At least two violent clashes of Daewoo protesters with police occurred. The first involved
about 5,000 protesters; at least twelve were arrested, and three injured. No statistics on police
casualties were given. About six hundred of these then went to Yonsei University, where a firebomb
clash took place (about fifty were involved with throwing Molotov cocktails at police).
March 29, 2001 [MyCNN]
- Argentina's Congress voted to give President De la Rua most of the "superpowers" that
the new Economy Minister Domingo Cavallo wanted. These permit the executive branch to
reorganize tax laws and bureaucracies without formal legislative approval. Similar authority
over state jobs and labor laws was denied. [This is Cavallo's second term at this post.
Cavallo successfully resuscitated Argentina's macroeconomy last time, but was removed for
attempting to eradicate corruption in the executive branch. Apparently, the corruption has
endangered Argentina's macroeconomy again.] Cavallo has mentioned that the current tax evasion
rate of 50% is a substantial aspect of the crisis.
March 21, 2001 [CNNfn]
- Germany's IFO hit an eighteen-month low at 94.9 for February 2001 (from 97.5 in January 2001). The last time the IFO
index was lower was in July 1999 (93.7).
March 19, 2001 [MyCNN]
- The Bank of Japan has announced that it is planning to raise bank reserves by ¥1 trillion. This will
have roughly the same effect as a zero-interest-rate policy. This is intended to continue until the inflation
rate becomes positive (i.e., there is inflation).
- Argentina's Economy Minister Ricardo Lopez Murphy has attracted violent protests of his policies
by unions representing government employees. The think tank FIEL, which hosts much of Murphy's
advisory team, had its offices bombed with no casualties.
March 17, 2001 [MyCNN]
- German Finance Minister Hans Eichel has commented that since Japan's government is not doing
markedly worse at improving Japan's macroeconomy, that Japan's macroeconomy poses no more of a
threat to the global macroeconomy than it has anywhen in the past three years.
- About 2,000 people showed up at a protest of South Korea's sale of Daewoo Motor Co to General Motor Corp.
About 600 of these later moved to a university, where about 150 firebombs were reported thrown at police in riot gear.
March 16, 2001 [MyCNN]
- Japan's Cabinet Office has described Japan's macroeconomy as stalling, due to a serious risk
of capital spending falling in the next few months, combined with an unemployment rate of 4.9%. In particular,
machinery orders fell 11.8% from Dec. 2000 to Jan. 2001.
March 14, 2001 [MyCNN]
- Teikoku Databank reported that Japan's bankruptcy debt for Apr. 2000-Feb. 2001 totalled ¥23.61 trillion,
beating a post-war record of ¥15.18 trillion in the 1998/99 financial year. Debt fell
debt fell 7.6% to ¥1.12 trillion for Feb. 2001 from Feb. 2000. The number of bankruptcy
cases was up 0.3% from Feb. 2000 to 1,448 in Feb. 2001. 1,063 of these were attributed to a
prolonged weakness in Japan's economy.
- In particular: in Feb. 2000, Phoenix Resort Ltd, (renowned for a dome-covered theme park),
filed for bankruptcy in Japan's biggest failure of a joint public-private sector project. Total debts
bankrupted (between Phoenix Resort and two affiliates): ¥326.1 billion. Dai-Ichi Kangyo Bank Ltd
(DKB), a member of Japan's biggest banking group, Mizuho Holdings Inc, is owed 57% of this.
- Fitch IBCA has put the individual ratings of 19 Japanese banks (but not long-term ratings)
under negative review:
- Asahi Bank (D)
- Ashikaga Bank (D/E)
- Bank of Tokyo-Mitsubishi (C/D)
- Bank of Yokohama (D)
- Chiba Bank (D)
- Chuo Mitsui Trust & Banking (D/E)
- Hokuriku Bank (D/E)
- Mitsubishi Trust & Banking Corp (D)
- Mizuho Holdings (D)
- Dai-Ichi Kangyo Bank (D)
- Fuji Bank (D)
- Industrial Bank of Japan (D)
- Yasuda Trust & Banking Co Ltd (D/E)
- Sakura Bank (D)
- Sanwa Bank (D)
- Sumitomo Bank (C/D)
- Sumitomo Trust & Banking (D)
- Tokai Bank (D)
- Toyo Trust & Banking (D/E)
March 13, 2001 [MyCNN]
- Nationalist Action Party (MHP) state minister Faruk Bal, whose portfolio includes
state-run Emlak Bank, said his party would back the proposal for a single administration for
Emlak, Ziraat and Halk banks on the condition that companies linked to Emlak bank remain under
MHP control.
- Bal also noted that Emlak bank now typically borrows only 600 trillion (Turkish) lira overnight,
in comparision to the typical range of 2,000 to 2,500 trillion (Turkish) lira borrowed overnight by each
of Ziraat and Halk banks.
- More interesting is overnight borrowing relative to assets: "The three banks account for more than a quarter of the Turkish bank sector's assets, estimated at 95,945 trillion lira in September 2000. Ziraat Bank had net assets of 15,033 trillion lira in that reporting period, while Halk Bank had net assets of 9,200 trillion lira. Emlak assets were 3,500 trillion lira."
- Turkish overnight interbank rates were only at 80% for today.
- Turkey's main labour unions have indicated they plan mass protests unless IMF and World Bank plans are totally rejected,
on the belief that such plans are certain to severely damage Turkey. [Have they forgotten where was Kemal Dervis recalled from?]
March 12, 2001 [MyCNN]
- Japan's real GDP grew by 0.8% for Oct.-Dec. 2000, averting technical recession in spite of consistent price deflation
since "the second quarter of 1998" (i.e., somewhen in July-Sep. 1998).
March 9, 2001 [MyCNN]
- Peter Vlaar, a Dutch central bank economist, has developed a mathematical economic model for
predicting the severity of a currency crisis if it happens. This model was said to have
warned about Turkey back in Dec. 2000. Argentina, Indonesia, and the Slovak Republic currently have the highest
ratings on this index. He also has a model that measures probabilility, but not severity; this index has been rising
for Brazil recently. This model predicted 21 out of 24 crises in his training sample -- but only two out of three predicted
crises actually happened.
- Turkey's new finance minister, Kemal Dervis, has indicated that he has no interest in rehabilitating banks
that have lost all of their capital.
March 9, 2001 [CNNfn]
- GE Capital, the financing arm of General Electric Co., is preparing a rival bid for taking control of
Finova Group Inc. This is their second attempt to do so; the first effort (cooperating with Goldman Sachs Group Inc) collapsed before
Berkshire Hathaway's plan was announced.
March 8, 2001 [MyCNN]
- "South Korea Thursday officially asked Interpol to help catch ex-Daewoo Group Chairman Kim Woo-choong on charges of fraud and embezzlement of billions of U.S. dollars."
- Japan's Finance Minister Kiichi Miyazawa, in remarkable candor apparently related to a temporary failure of self-discipline (he retracted this the next day), said
that Japan's finances are on the verge of collapse. Miyazawa has been visibly concerned for some time about Japan's national debt growing much beyond 130% of GDP.
March 3, 2001 [MyCNN]
- The former head of Turkey's Banking Supervisory Board, Zekeriya Temizel, has resigned. This appears to
be due to his extreme resistance to cleaning up Turkey's banking sector...which is incompatible with Kemal Dervis' appointment.
March 2, 2001 [MyCNN]
- Prime Minister Bulent Ecevit announced that Turkey has appointed Kemal Dervis, a Turkish member of the World Bank, as minister over the Treasury.
Central Bank deputy governor Sureyya Serdengecti was elevated to Central Bank governor.
- Fitch IBCA has lowered its outlook on Japanese Government Bonds to negative from stable.
No-frame index