Zum Thema Japan

verfasst von XERXES, 09.01.2002, 10:52

Japan seen on the road to default

WASHINGTON (Kyodo) Japan is on the road to default because it is expected to incur an unsustainable debt burden of $1 trillion in protecting depositors from the collapsing banking system, according to a report released by a Washington-based think tank.
"The negative net worth of the Japanese banking system is somewhere above the yen equivalent of $1 trillion. When the banking system collapses... the Bank of Japan will need to inject at least $1 trillion into the banks to protect depositors from losses," says the latest issue of the Economic Outlook report by the American Enterprise Institute for Public Policy Research.
The report says the inability of the Japanese government and the BOJ to remove deflationary pressure will inevitably lead to the failure of one or several large banks, and ultimately to the failure of the entire banking system.
As the banking system collapses, the Japanese government will have to stave off additional losses of households and business depositors in the banks through recapitalization, it says.
The report says the Japanese government will be forced to issue $1 trillion worth of securities that the BOJ will buy and inject into the banking system.
"Such systems will probably result in nationalization of Japan's banking system, since the government will have underwritten its solvency," it says.
As a result of the issuance of a huge amount of government securities, Japan's public debt will jump immediately by about 15 percent, and the surge in liquidity will cause Japan's currency and bonds to collapse, the report says.
"Japan's deflation and debt crisis now constitute systemic risk to the global economy," it says.
The report also says that the Japanese government, foreseeing a run on banks, may postpone the March 31 termination of its full refund guarantee for deposits at failed banks. But this will only delay the outright collapse of the banking system.
Japan needs"a massive direct injection of liquidity into the economy -- not into the moribund banking system -- through the direct purchase of foreign bonds, corporate bonds and land by the BOJ," the report says.
The Japan Times: Jan. 8, 2002
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