Wilbur Ross made an interesting comment at an Invesco seminar in Tokyo on Thursday, stating that Japan’s financial system has never been healthier — even (historically) compared to the U.S. No further details were provided by financial press coverage in Japanese, but it is fairly obvious that the Japanese were primarily (although marginal) customers of U.S. financial toxic waste products and not distributors or manufacturers of their own version of ABS and CDS gone wild.
Mr. Ross did mention the recent resurrection of pre-Glass-Steagall conditions in the U.S. He also reiterated that many more banks are poised to fail in the U.S. I believe he recently said up to 1,000 could fail and that he wouldn’t invest unless the conditions were right with government support. Can’t blame him.
So, are Japanese banks a screaming buy with so many of them trading less than book and seemingly having higher quality balance sheets … or do distressed U.S. banks represent the bigger prize? Maybe neither. Massive ongoing value trap in the former and massive ongoing value destruction in the latter.