Updates from the Managing Director

  Yogurt stocks disappear from supermarkets as food shortages loom The cutting of Public Works by more than half has led to a crash in the amount of construction jobs, especially when paired with the interest rate shock caused by the rapid increase of interest rates from 0.5% to 3% with no cushioning. With the unemployed roaming the streets, Japan is not looking like a good place to invest in right now.  As debt repayments also fall to 15% from 22.1%, banks and lending institutions are now considering withdrawing from any governemetnal involvement, with a downgrading of the credit rating from AAA to AA-  within a month by the S&P. Yogurt companies no longer have a consumer base nor trust to keep selling and remain listed on the Nikkei. With the Special Economic Zone in Hokkaido, Tokyo, Osaka, and Fukuoka, designed to attract an impossible 82% increase in Foreign Direct Investment, quickly becoming ground zero for a new financial crisis — a money laundering haven. As t...

Who benefits from the Korea Lending Arrangement? July 18th, 1998 While the recently passed IMF lending arrangement has been seen by some as a lifeline for South Korea’s economy, it has drawn strong criticism both at home and abroad.  The 20 billion loan to South Korea at 0.5 percent was meant as a loan to stabilise the plummeting South Korean economy. This loan, structured in 3 phases, comes with a clause: 6 billion of the first 12 billion must be borrowed in the U.S. Treasury Bonds, and invested in US firms. Critics of this arrangement have argued that this lending scheme amounts to a backdoor transfer of American debt onto the Korean public. It seems that half of the loans are invested in firms, safeguarding U.S. financial interests. Furthermore, funds allocated to the recovery of the Korean economy are monitored by a joint US-Korean committee, giving the US veto power over the usage of these funds. This leads to the public questioning, Who really benefits from these funds? Forei...

  In other words, Wall Street is now getting suspicious  In times of crisis like these, we need to utilise our cash reserves to buy assets at the right price. As of now, we have seen no concrete action taken by the IMF in assisting the crisis at hand here, which showcases potential issues with the bureaucratic process. Is it time for us investors to step in?  Perhaps not as there is still much potential for great downside in these economies. As for Berkshire, we shall be waiting for a signal — or rather, any good news — for us to start putting our cash reserves to use and bringing profit back to our shareholders.  “Never bet against America, but you can definitely bet against these flailing nations.” - Buffet, 1998