Ladies and gentlemen, welcome to another episode of the Grant's Interest Rate Observer

Podcast. I am Jim Grant, and joining me today, as always, is the great Evan Lorenz, the deputy

editor of Grant, sitting directly across from the end to my left, as you might imagine,

is the man that controls, Eric Whitehead. I don't know. Remember Sesame Street used to be brought to you

by a letter of the alphabet, like the letter A? And I'm thinking that one episode, perhaps this one,

of the Grant's Interest Rate Observer Podcast, ought to be brought to you by the word challenge,

which word I cannot, I cannot escape this word.

Everywhere you look in the financial and business literature, there's this nagging euphemism called

challenge. Have not just like a big pile of trouble instead? Well, that's, okay, that'll

end that editorial. But the actual

sponsor of today's podcast is Pitney Bowes, and you'll be hearing more about the excellent

Pitney Bowes in a few minutes. But first, Evan, I would like to ask you about a new problem, a challenge

that has surfaced thanks to one of our keen-eyed readers.

This comes to us, this news item comes to us from the Niki, the kind of the Dow Jones of Japan.

And the news item concerns the exposure of the Japanese banks to dollar funding, when they

don't actually, you know, they don't naturally accumulate dollars

through deposits, but yet they have upwards of $3 trillion or more in dollar assets. And how do you

analyze the situation, Evan? Well, this is new for Japan. It's not new by history by any chance.

If you look in the BIS's, the Bank of International Settlements, kind of the

central bankers bank or the central bankers Swiss bank. The central banker's Swiss bank. In their annual report,

they talk about how European banks found themselves in kind of a similar situation in kind of the

mid-aughts. They ended up kind of binging on U.S. assets, especially U.S. structure credit,

...