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...