Are Japan's long-awaited economic reforms finally coming ?

[Maciamo]

Newsweek
Flat on its Back

Japan’s leaders have finally admitted what the rest of the world already knew: the country’s banking system is in critical condition. And that’s the good news.

Oct. 21 issue - Something fundamental has changed in the way the world sees Japan. Last Friday, at the close of a nail-biting week in which Japanese stocks plunged to levels not seen in a generation, the Bank of Japan, led by outspoken governor Masaru Hayami, sounded an alarm about the nation’s deteriorating financial health.

To know what companies are in trouble, read the related article :

Pushed to the Edge

The new economic czar spooked Tokyo markets when he said no company is too big too fail. He didn’t name names. But investors know who he’s talking about.

[thomas]

“We consider it brutal to pull on the legs of a man as he hangs himself,” says a local credit analyst. The question now is whether the politicians, bureaucrats and bankers are ready to see this as necessary triage. If they are, Japan faces a “hard landing” marked by a surge in bankruptcies, massive unemployment and a host of painful social problems that inevitably arise at the bottom of any business cycle.

Welcome to the "free market". ;)

[Maciamo]

Until now Daiei Inc. has defined the phrase “too big to fail” in Japan. The retail conglomerate, once a housewife’s best source for soap powder and green vegetables, carries more debt ($17.3 billion) than many countries

It's interesting indeed to compare the debts of Japanese big companies and banks to the public debts of small or poorer countries. Daiei, has more debts (US$17.3 billion) than all the money made in Iraq in a year (GDP=US$13.3bn in 1999), which leaves me perplexed over the real power of Iraq against the US. Basically, Daiei's debt is higher than the GDP of more than 100 countries (only 68 countries have a higher GDP than US$17bn > sourceWorldbank.org (PDF file) ). Bhutan (GDP=US$0,53bn) or Djibouti (GDP=US$.57) would have to give all the money produced in their country during 35 years to pay back for Daiei only !

Mizuho has (on paper at least) US$1,2 trillion in assets. That's about the same as China or France's annual GDP, or a almost a third of Japan's own GDP. Not bad for a single company. With a worst-case estimate of US$1,9 trillion in bad loans, that put the country in serious trouble !

[moyashi]

@ market

I bet you'll see Japan apologizing for WWII before they'll cut off the cash to all those companies.

Although, I do see Daiei being a sacrafice much like Takugin was in Hokkaido. hmmm, looks I was wrong Daiei just got 80 million Dollars worth of support.

Like I said, too many bankers, politicians have been payed off. If politicians went against their promises you'd see the news full of scandals related to the politicians for taking bribes.

I say just let them all die.
Force the unemployment rate up to solid double digits. Force all those 40-50 year old salarymen out on the street, those same folks who have 50 year housing loans. Watch the real estate market firmly bottom out and crash. Which will also punch a solid blow into building construction industry which is run on a 30 year rebuild your home mentality. These carpentars will add to the unemployment figures. The unemployment agencies are already impacted and can't find enough jobs for all those souls who have families. Since unemployment rate will increase and 50 year olds will NOT find another job with a similar salary the number of children going to high school will drop which will effectively help make Japan dumber in general spurning even stupider policy decisions in the future.

Can anybody say," Sid Vicious" ?

Of course, this bleak outlook will probably never come about since many politicians been bought by many corporations.

100 yen stock market. I love it!

[Maciamo]

That worries me. These reforms might give results in the long term, but in the short term the unemployement will soar as companies close and there is a real risk of general collapse of the whole economy (and that means, it will take a long time before the situation gets better). That might change completely the face of Japan...

[moyashi]

I totally agree with you Maciamo. The dangers are very huge.

Japan should really look into asking the populace what it wants and thinks for once.

[thomas]

Japan Delays Release of Bad Bank Debt Plan

=> http://www.voanews.com/article.cfm?o...name=Business#

[moyashi]

GO! Takenaka! GO! Takenaka!

Dang, senior politicians = golden parachute = vice president position in a nice sized company!

hmm, $33 billion in bad loans? I think Takenaka is right for sticking to his position even if it means that the above $33 billion is actually more like $33 TRILLION! A little exageratted but by how much so I wonder?