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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (6987)	10/6/1998 11:00:00 PM
From: Derrick P.	Read Replies (2) \| Respond to of 9980

Could Japan finally be straightning out their banks?: biz.yahoo.com Enactment of Japan weak-bank bills certain--media TOKYO, Oct 7 (Reuters) - Laws to allow the Japanese government to inject public funds into weak banks -- and in some cases sound ones -- are sure to be enacted by the current session of parliament, local media reported on Wednesday. Two opposition groups basically agreed late on Tuesday to support a revised proposal by the ruling Liberal Democratic Party, which the LDP will submit to parliament later on Wednesday, the reports said. The current session of parliament, which was originally scheduled to end on Wednesday, is expected to be extended by about 10 days to handle the weak-bank bills and other measures. The Heiwa-Kaikaku group and the Social Democratic Party dropped their objections to the LDP plan after the ruling party made several revisions, in particular adding conditions to any capital injections for banks that already meet international capital-adequacy standards, the reports said. The largest opposition Democratic Party, which joined the LDP on other bills to wind up failed banks and nationalise those that request the move, remains opposed to the LDP's bank-recapitalisation bills, senior party official Yoshito Sengoku told Reuters Television on Tuesday. Following are key revisions in the LDP plan, obtained by Reuters: * Set up a special account to fund capital injections, separate from the account that is to fund the cleanup of failed banks. * Allow capital injections for banks with capital worth at least eight percent of assets if: -- the bank is the receiver bank of a failed institution -- the injection is needed to avoid a drastic cutback in credit -- a capital increase is unavoidable from the perspective of realignment in the financial sector. The LDP agreed to consider fuller disclosure of banks' class two ''grey zone'' problem loans by dividing them into categories. They are now vaguely defined as those the bank itself feels require more care than other obligations. The LDP did not accept opposition demands to require fixed amounts of loan-loss provisions for each class of problem loans, but the plan agrees to consider the issue after the currenct crisis passes. The ruling party rejected a Democrat demand that banks be made to value their securities holdings at the lower of either cost or market price. The plan would allow banks to continue choosing which valuation to use. Bank officials have argued that this could push some banks into technical insolvency.

To: Zeev Hed who wrote (6987)	10/6/1998 11:45:00 PM
From: Step1	Read Replies (3) \| Respond to of 9980

Saving is deferred spending... The spending potential is there, it just needs the right conditions to be brought out. Zeev, l live in Japan and have done so for the last 6 years. While that doesn t make me an expert on the topic I can tell you what I see and hear and how much sense it makes to me. First of all, Stephen Yeo wrote in an earlier post something that went straight to the heart of the problem (socially and culturally at least ) a few posts ago. Japanese people over 55 years old all remember the abject poverty they lived through after the WW. To them, things arent so dire yet. They remember the US sponsoring school lunches, the clothing and other essentials the Americans provided for them. Milk and eggs were a real rarity then and only the rich could ever dream of having them everyday and then again... But they got them in the school lunches... Their last reflex in time of crisis is not to spend, believe me. I am not old enough to have known even the Viet Nam war but talking to them, the first 10 years after the WW were no fun. Now maybe you think I am starting too far off from the problem but at the risk of making this a really long winded post let me tell you where I think the problem is. There is obviously a lot of dead money in Japan; finding a way to bring it to good use is the key to a healthy balanced recipe for sustainable growth. I aint stating anything new here. The word here is sustainable. What good is a 300 usd "gift certificate" going to do to your long term prospect for your standard of life? Should you get new curtains for your old decrepit house with that ? Maybe I should ask my landlady to get me a water heater for the tap in the kitchen, (I only have a gas heater for the shower, none for the kitchen...) I think what they need to look at is ways to convince the people with the most savings and most disposable income (55+) that spending in order to improve their quality of life is sensible and will pay off. Asking to throw money out the window to get gadgets they don't need or new gadgets that do the same things that old gadgets do is not going to work. The people are not stupid... Would you be? Would you spend your money even if the Democrats orchestrated (I am assumming you are a US citizen...) a "fine " effort in PR to convince you to spend more for the cause of the Free US of A? Back tracking a few lines, what I meant by durable, sustainable growth and the path to it (if there is such a thing, really aside from cancer cells, how many natural organisms can you name that will never stop growing and still be healthy?) for example would the upgrading of people's homes and living environments. If you can get passed the dizzying skyscappers and exhorbitant living quarters for foreign based staff in Tokyo the average "home" in Japan leaves much to be desired. Go to smaller towns and cities and you will even encounter appalling living conditions, condidering this is a G7 member. I am not talking ghettos, just large tracks of city dwellings that are sub par, some of it built in pre war Japan (if it escaped the bombings which in the country side it often did) and some built immediately after the war, ugly as ugly comes, not meant to have lasted this long but given the propensity the Japanese have to save was never done away with. Clearly a lot of these buildings or home will not be adequate for an aging population and their specific needs. So, as a previous poster pointed out, tax credits directed at home ownership, home improvements, class "A" buiding construction (that would mean just plain demolition and reconstruction in many cases), in short a policy with a vision, something that would give people a glimpse of their future as they age and can see themselves enjoying the fruit of their hard work (comfortable home, vacation etc ) is in my view the only way out. Right now I don't see that happening and a plan to put gift certificates in people hands would only be viewed as a small band-aid on a festering open wound. Can you implement my suggestions in a short time, unfortunately not and now that the Big Bad Bear is at the door threatening to blow the house down (That came from a different story, didn't it? ...<g>) it is a bit late. THe Japanese people are now just starting to pay for the lack of vision and leadership, the complacency and the failure to foresee the impeding catastrophe on the part of their government. Your comments welcome sg