Time article re Japan, a preview of what America will see in their TIME magazine monday....http://www.time.com/time/nation/article/0,8599,102490,00.html
An excerpt:
Why is that such a big deal?
BB: When you have a bank in the U.S., you have to keep a certain amount of cash to back up your loans. In Japan, they let the financial institutions — banks, insurance companies, pension funds — use stocks as their capital, and these banks are heavily invested in Japanese stocks. The stock markets' decline is threatening to tip these institutions over into total insolvency.
That would require the biggest government bailout in history. Japan's national debt, at $5.4 trillion, is 130 percent of their GDP, whereas the U.S.' $3.4 trillion is only 35 percent of its GDP — the Japanese government just can't afford it. |
