Do not underestimate the effects of greed and fear. I understand that both Cambior and Ashanti were caught with their shorts pulled over their heads.
Did you predict that this would happen?
Grist for the mill.
Savers waking up to the need to protect assets
By JUN SAITO, The Asahi Shimbun
With full guarantees on bank deposits about to be lifted, anxious investors are seeking ways to safeguard their savings.
On the eve of the lifting of the full guarantee of bank deposits, savers are desperately searching out safe shelters for their assets.
Like many anxious depositors, Kazuko Nakanishi, 52, has attended asset management seminars to learn how to protect her funds.
She feels ignorant of her options when the 10 million yen cap on time deposit guarantees takes effect Monday.
``I know I can no longer keep assets in the same way,'' said Nakanishi (not her real name), who runs a small printing firm with her husband in Tokyo's Nakano Ward. ``But I don't have enough knowledge about financial instruments.''
Her family has bank deposits of around 8 million yen in operating funds for the factory. The family's private assets of 12 million are kept in time deposits at the same bank.
``The series of bankruptcies at financial institutions has made us believe that Japanese banks are no longer safe,'' said Nakanishi. ``I hope to invest some of our assets in foreign financial tools and learn how to select reliable brands.''
According to the Financial Services Agency, more than 50 financial institutions, including regional banks, credit cooperatives and credit unions, have gone belly up since January 2001.
At an investment forum in early March, Nakanishi listened as Takashi Asai, a critic on economic affairs, reminded the participants of the need for individuals to prepare measures to protect their deposits and other assets.
Asai said the removal of the full deposit guarantee system was only a prelude to a financial crisis.
``The Japanese economy is surrounded by risk,'' he said. ``In particular, the enormous government deficit may be a time bomb that could heavily damage the financial system.''
More than 400 anxious investors were at the meeting.
One participant, Masanori Hori, 35, seemed at a loss as to how he could protect his assets in bank deposits.
``I'd been vaguely aware that our pension benefits could be reduced because of the severe state of the government's finances,'' he said. ``But the removal of the full deposit guarantee makes me more pessimistic because even my bank deposits are no longer fully protected.''
He added: ``There will be no place where our assets are fully guaranteed. I will have to take some risk.''
Ahead of the removal of the full deposit guarantees, individuals are shifting money from time deposits to ordinary savings, which remain fully protected until April 1, 2003.
According to the Bank of Japan, cash-on-demand deposits, such as ordinary savings, jumped 16.3 percent to 148.9 trillion yen as of the end of 2001 from a year before, while time deposits declined 2.2 percent.
Wealthy individuals are opting for gold as a safety hedge.
According to the nation's largest precious metal dealer, Tanaka Kikinzoku Kogyo KK, the quantity of gold sold in February was more than nine times year-earlier levels.
``Many customers buy 5-10 kilograms of gold bars, valued at around 7-14 million yen,'' said a clerk at the company's retail store in Tokyo's Ginza district. ``One customer purchased more than 40 kg of gold with family members, who helped carry the bars back to the car.''
Gold prices are rising steadily. As of Friday, the gold price stood at 1,411 yen per 1 gram, up from around 1,000 yen in March 2001.
The cap on deposit insurance protection not only worries individual depositors but also groups that keep reserves in bank accounts.
In the middle of March, Ryosuke Matsunaga, head of a residents' association of a group of condominiums in Yokohama, held a meeting to explain how residents can protect nearly 100 million yen set aside in time deposits for condominium maintenance.
``All we could decide was to transfer two-thirds of the money to ordinary savings in three financial institutions,'' Matsunaga said. ``We have bought long-term government bonds with the remainder.''
At the meeting, some residents proposed buying investment trusts and other financial tools.
``But we couldn't reach an agreement,'' Matsunaga said. ``Many are opposed to subjecting our maintenance reserves to risk.''
With the guarantee on ordinary savings due to be abolished in April 2003, Matsunaga is well aware that the solution only provides a temporary respite.
``We will have to continue debating the safe custody of our money,'' he said.(IHT/Asahi: March 30,2002)
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