business

Japan short of rescue plans for regional banks hit by pandemic

4 Comments
By Leika Kihara and Takahiko Wada

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I think this article points out a lack of faith and trust in Abe and his administration; not only from the populace but also from the financial sector. Not a good read. Like his pandemic response with no national, centralized leadership and leaving everything to be handled regionally he’s basically absolving himself from any responsibility and the banks know that. Abe’s lack of action will only result in banks holding onto the money rather than lending at high risk and measly interest rates. Unless Abe proposes a financial package to support SMEs and other borrowers, the banks will not lend until the liquidity problem is addressed, never mind solvency. Many of the SMEs and families impacted by this pandemic are already digging into their savings. Does Abe really think the banks will lend under these circumstances? The Abenomask and Go to campaigns were faced with ridicule but I’m sure in the financial sector it was met with shock and disbelief. If this was all the administration could come up with in a time of crisis, the banks realized that if they pursued the government’s policies, they would eventually be left holding a bag full of bad loans. Banks holding lots and lots of bad loans, I think I heard that somewhere before…

1 ( +1 / -0 )

Ponzi scheme come to mind. But by the national state.

Sooner or later, you'll have an asset crisis, when people want their money from their bank but cannot get it.

I can't understand the need of a regional bank. Bank is international or it is not. Money has no border.

4 ( +4 / -0 )

Osaka saw 147 companies go under in June, exceeding Tokyo as the hardest hit centre in Japan

The solution for such companies is to quickly pivot to making medical equipment such as sanitizers, gloves, masks, etc. Sell them by the millions to countries that would rather buy "Made In Japan" medical equipment than that of cheap imitations ( and possibly sabotaged) equipment from certain communist countries.

The Japanese government can help by not charging tax for these companies for a certain period ( say 2-5 years?).

1 ( +1 / -0 )

Sooner or later, you'll have an asset crisis, when people want their money from their bank but cannot get it.

The reason why Japan didn't immediately collapse in the Argentinian style after the bubble collapse is the United States.

The US forced Japan to undo its bubble economy earlier before things get way worse than anyone can imagine. The US now found China, Vietnam and India as the substitutes for manufacturing as well as Taiwan and South Korea for hi-tech manufacturing (except most electronic companies of those two are majorly foreign-owned, unlike Japan). Japan was forced to de-industrialize before it can make meaningful, institutional reforms like Germany did many decades before Japanese bubble economy - Germans avoided the negative sides of Plaza Accord because they never had a bubble economy in the first place.

The US forced Japan to always invest its money into American territories and the United States itself. Almost all of Japanese assets, which make Japan as the world's net creditor, are all held in the United States under the watchful eyes of the US Treasury. However, the profitability and liquidity of those assets are in a huge question mark. We all know that the US has the leverages above Japan because it manages Japanese assets in the USA. The US government can unilaterally seize all Japanese assets in the West if Japan does something against the US politically - The USA frequently did in the past like with Venezuela or Iraq. Not to mention, the US forced Japan only to buy US bonds that will further enhancing the infallibility of USD global regime.

Like you said, all Japanese assets are now in the hands of US Treasury and American banks. Japanese government can't liquidate them to get the money back for the people.

6 ( +6 / -0 )

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