Japan Sinking Fast

Safe Money Report ^

[Magician]

"By the end of March, we will have a financial crisis -- that is 100% true." -- Yoichi Mazuzoe, influential ruling-party legislator

"It's quite possible that Japanese institutions will fail. If a chain reaction of withdrawals occurs, like sea waves, it is highly likely to shake the financial system." -- Governor of the Bank of Japan, Masaru Hayami

"Japan's deflation and debt crisis now constitute systemic risk to the global economy." -- Study released last week by American Enterprise Institute for Public Policy Research.

For the better part of a decade, recession has gripped Japan's economy. Now, it looks as if an economic depression is inevitable.

Japan's banks are teetering on the edge of destruction. According to the AEI's Institute for Public Policy Research, Japan's banks have a NEGATIVE net worth of $1 TRILLION! And yet, the banks continue to dole out huge loans to failing companies. At the same time, they are facing what could be a record number of withdrawals as the Japanese government implements deposit insurance reform.

Currently, depositors in Japan's banks have unlimited insurance protection from the government. On April 1, the government will switch over to a system more like FDIC insurance in the US -- insurance will be limited to accounts with less than 10 million yen (or approximately $75,000). Tens of billions of dollars could exit Japan as worried account holders flee with their cash.

Very soon, banks themselves will need a handout to stay afloat. And they will very likely find themselves empty-handed. As financial institutions in Japan implode, all of the companies they've been propping up will fold as well.

Japan is the world's second largest economy. When it collapses, there is no force on Earth than can hold up the US or Europe. So stay tuned.

[Pontiac]

According to the AEI's Institute for Public Policy Research, Japan's banks have a NEGATIVE net worth of $1 TRILLION! And yet, the banks continue to dole out huge loans to failing companies. .

This is probably Japan’s biggest mistake. Had these companies been forced into bankruptcy (cut off from new loans) and their assets sold, new companies with better management would have arisen to take the place of the failed firms.

Cronyism fails were ever it arises because it protects failure.

[weikel]

They are also protectionist which drives up prices for everyone.

[Freedom'sWorthIt]

Not good.

[Dog Gone]

Japan, the Enron of nations.

[VaBthang4]

Just how many times can their economy collapse for pete's sake? Oh well............somehow I discern that...........the sky will not be falling.

[Magician]

Neat post.

[Pontiac]

Japan is the world's second largest economy. When it collapses, there is no force on Earth than can hold up the US or Europe. So stay tuned. .

This may be true. Many economist blame the Great Depression on the collapse of the German economy due to crippling reparations put in place at the end of WW I.

However considering the strength of the US economy, the integration of the European economies and the greater diffusion of the world economy today I do not believe that the failure of any one nations banks could bring down the world economy.

[mikhailovich]

Good. Let 'em sink. Their tourists in Hawaii sure haven't hurt their economy. They wouldn't buy anything American with a gun to their head. Next time you see an Asian driving by you, take note of what kind of car he or she is driving. It won't be anything but Japanese. Let their a$$ sink.

[Eric in the Ozarks]

Maybe US and Canadian banks will strike Japanese gold...

[Magician]

Run that by my Korean wife. Then DUCK! She despises the Japanese and won't buy anything made by them if avoidable.

[Post Toasties]

Another reason to get the economic stimulus package past Daschole, pronto!

[Caipirabob]

Where's Samurai Jack when you need him?!?

[Phyto Chems]

Japan's banks have a NEGATIVE net worth of $1 TRILLION! And yet, the banks continue to dole out huge loans to failing companies.

What companies are these can we get them listed here???, Great post.

[Pyro7480]

LOL

[PJ-Comix]

The problem with Japan is that they don't sell stuff that people want any more. During the 1950's they made lots of cheap stuff sold in large quantities in the USA. "Made in Japan" became a synonym for cheap products. However, starting in the 1960's the Japanese began producing quality electronic goods and cars that became very popular here. The problem is that other Asian nations copied the Japanese. First with the cheap stuff and now with the electronic products. Nowadays, you rarely see electronic items marked with "Made In Japan." Most TV's, VCR's, computer equipment, etc. is made in Korea, Taiwan, or in China.

[glmilligan]

"What companies are these can we get them listed here???"

Also real estate loans which turned upside-down (collateral not worth as much as is owed) when property
values declined. Banks have been reluctant to write them off, preferring to keep them on the books.
postponing the inevitable.

[FreedomPoster]

I see plenty of ethnic Chinese cruising around in non-Japanese cars; Mercedes seems a favorite.

[Enemy Of The State]

"Japan is the world's second largest economy. When it collapses, there is no force on Earth than can hold up the US or Europe. So stay tuned. ."

You can bet your little red wagon that China has been waiting for this...

[Enemy Of The State]

Do you really think the US will let Japan sink? Your Naive if you do. Believe it or not but it is in the United States best interest to make sure Japan doesnt sink. Consider where this is going to put China....?

[Paul C. Jesup]

One third of the U.S. 6 trillion dollar national debt is held in U.S. Treasury Bonds by Japan.

I don't even want to think about what is going to happen to this country when Japan calls in their loans.

[Straight Vermonter]

One third of the U.S. 6 trillion dollar national debt is held in U.S. Treasury Bonds by Japan.

I don't even want to think about what is going to happen to this country when Japan calls in their loans.

Well actually the debt is held by individual Japanese not the country. The debt as you said is held in the form of US bonds. They can not call in a bond. Its not a loan.

[glorgau]

Run that by my Korean wife. Then DUCK! She despises the Japanese and won't buy anything made by them if avoidable.

Koreans do not like Japanese!!!

[B-Chan]

Shiigata ga nai, ne?

[willyone]

A few years ago on one of the A Bomb anniversaries one of the local San Diego news babes was stopping people on the street and asking their feelings about nuking Japan. She goofed when she asked a Korean lady for her opinion. With a straight face the lady replied that her only regret was that the US did not have ten more bombs. The look on the reporters face was priceless.

[willyone]

If that were true then why have we allowed China to replace Japan as our largest negative trade balance exploiter? At least the Japanese are not planning on doing their best to wipe us out. And we are funding the Chinese in their quest for nuclear capability.

[HardStarboard]

>>>Believe it or not but it is in the United States best interest to make sure Japan doesnt sink.<<<

So you think the American taxpayer will willing to shell out 500 Billion in loans to keep Japan afloat. Think again kimosabe! (Thats "friend" in Japanese...right?)

Maybe I can get my next Land Cruiser for pennies on the $....probably not. I seem to be on the wrong side of both booms and busts!

[Enemy Of The State]

"If that were true then why have we allowed China to replace Japan as our largest negative trade balance exploiter? At least the Japanese are not planning on doing their best to wipe us out. And we are funding the Chinese in their quest for nuclear capability"

Simply put: Because the Politicians in Washington are Idiots. They are appeasing the CHinese like the Europeans did the Germans. This country isnt ran by the President of the United States anymore, he is only a puppet to the CEO's of Big Business.

[Enemy Of The State]

"So you think the American taxpayer will willing to shell out 500 Billion in loans to keep Japan afloat. Think again kimosabe!"

I dont think they will be willing to but if they are smart they will see that it is in their best interest to do what we can. Japan remains the only means of a counter-balance of Power in the Asian region. If Japan falls, China will become the regional superpower by succession and not just economically but militarily. The United States needs Japan just as much as Japan needs the US if there is ever to be any hope of maintaining peace in Asia and abroad. Unfortunately, most Americans dont realise the how severe the ramifications will be if China becomes the is allowed to become the hedonist bully it seeks to become in Asia...

[RightWhale]

China should worry. Japan is one of their largest investors. If Japan pulls the plug, there goes China down the drain, glug . . . glug . . . glug

[borghead]

If Japan's economy collapses, China just be holding itself together will be the dominant power in east asia, noone else in the region stands a chance except Japan.

[borghead]

This is exactly why China should not worry. If Japan's economy sinks, all of its capital will flow to China, there will be more investors not less. As for two way trade, only about 20% of China's GDP is from external trade, and Japan takes only a fraction of it. So if Japan rots, China only stands to gain from it.

[DB]

You have to find a buyer for your bonds. You don't simply demand repayment. If they dump their bonds they loose as well because the price falls through the floor. It is called supply and demand. In truth those bonds are the most valuable assets they have. It is currently holding its value. To convert stable US bonds into Japanese Yen that becomes worthless in an economic collapse would be a disaster for them.

[DB]

Throwing money at Japan will not save them. The Japanese Govporation is corrupt to its core. The day of reckoning is nearing. If Japan's economy collapses so does China's. China provides the manual labor for the Japanese businesses.

[reagan_fanatic]

Samurai Jack!! LOVE that cartoon!!!

[Capt. Tom]

I see plenty of ethnic Chinese cruising around in non-Japanese cars; Mercedes seems a favorite There is a lot of resentment by the older Chinese towards the Japanese. I had a Chinese boss who had his mothers side of family wiped out by the Japanese. He constantly castigated the Japs.

Another Chinese friend told me of an uncomfortable situation his neice put his family in when she came from from college and brought a Japanese boy along with her. The younger Chinese American born generation don't hold the grudges the older members of the family have.- Tom

[RightWhale]

20% of China's GDP is from external trade

That is huge.

[borghead]

Its all a matter of investment, if a Japanese coporation goes down, it does not mean that a japanese join-venture in China goes down too. Since most of those jap products(cars,dvd players,,,etc) manufactured in china are then sold in China, if their headquaters goes down in Tokyo, they will survive without a dent.

[borghead]

Practically all recent chinese immigrants to the U.S have some family member killed by the Japs. China lost 15 million people in WWII.

[Capt. Tom]

Japan is the world's second largest economy. When it collapses, there is no force on Earth than can hold up the US or Europe. So stay tuned.

As long as the world believes our money is worth something, it is worth something. -Tom

[glmilligan]

"I see plenty of ethnic Chinese cruising around in non-Japanese cars; Mercedes seems a favorite."

China and Japan have been enemies for a long time.

[Lessismore]

Unlike Enron and Andersen Accounting, Japan can cook the books as long as it likes.

[tubebender]

If that were true then why have we allowed China to replace Japan as our largest negative trade balance exploiter? At least the Japanese are not planning on doing their best to wipe us out. And we are funding the Chinese in their quest for nuclear capability.

We have no Walmart here (we voted it out) but no matter where you shop you are selling your freedom to China.

[borghead]

Japan wouldn't be planning to wipe out the U.S because they don't have the resources or the man-power to do it, not because they are a democracy. If Japan was as large as China, then WWIII would have started decades ago.

[Davea]

Good post Magician.

Some folks around here are whistling past the graveyard actaully believing our "recession" and the world economy is on the rebound. These were the same Freepers who screamed to hold on when the Nasdaq was dying calling others "chicken little". Well, 5 trillion dollars later.... We haven't seen anything yet.

Japanese Banking System 'About To Collapse'

1-9-2 TOKYO (Sapa-AFP) - Japan's financial system is headed toward collapse and will require a government bailout of one trillion dollars, a US think tank said.

"Japan appears poised to follow the passive route of outright default," resident scholar John H. Makin wrote in the monthly Economic Outlook report put out by the American Enterprise Institute for Public Policy Research on Wednesday.

"The negative net worth of the Japanese banking system is somewhere above the yen-equivalent of one trillion dollars," Makin wrote. "When the banking system collapses... the Bank of Japan will need to inject at least one trillion into the banks to protect depositors from losses."

He said such a procedure would need to be financed by the Japanese government, resulting in total public debt jumping by 15 percent, and causing a surge in liquidity that would cause Japan's currency and bonds to collapse.

'It amounts to beating harder a dead horse' "Japan's deflation and debt crisis now constitute systemic risk to the global economy," he wrote.

The report harshly criticises Japan for failing to stop rampant deflation, which increases the burden of paying off debts.

"Efforts by the Bank of Japan to boost economic activity and to reflate by increasing reserves in the banking system and cutting short-term interest rates virtually to zero amount to beating harder a dead horse," Makin wrote.

"The dead horse is the Japanese banking system, which by virtue of its insolvency is unable to act as a financial intermediary borrowing short from the central bank and lending to Japan's private sector."

Makin also criticised moves to postpone past next March the government's plan to cap its guarantee on bank deposits to 10 million yen (about R900 000), saying; "that step will only delay the outright collapse of the banking system."

[FreedomPoster]

China and Japan have been enemies for a long time.

Lesse, you only really have to go back 65-70 years for plenty of ugliness. And of course, the "divine wind" that once upon a time saved Japan destroyed a Chinese invasion fleet (Mongol emperors at the time? I think so, but not sure). "Divine wind" = kamikaze, which of course later came to be applied to something else.

[A. Pole]

One third of the U.S. 6 trillion dollar national debt is held in U.S. Treasury Bonds by Japan.

Oh, so there is no problem. In a macroeconomic move Japan can call half of the money loaned to US, come even and even charge the higher interest on the other half.

[Eric in the Ozarks]

Skoshi.

[Enemy Of The State]

Do not be so Naive. While Japan is highly invested in China so are many other countries...such as that of the United States. Our govt. is just as foolish as the Japanese.