When will the Japanese economy collapse?
Japan: the consequences of the bubble / by Michael Ehrke. - [Electronic ed.]. - Bonn, 1996. - 18 pp. = 54 Kb, text. - (FES analysis)
Electronic ed .: Bonn: Library of the FES, 1998
© Friedrich Ebert Foundation
*The recovery of the Japanese economy is a long time coming. The conventional approaches of the The fight against the crisis has been exhausted: The central bank interest rate is 0.5 pro, which can no longer be undercutcent, and even $ 600 billion in government stimulus injections in four years did not initiate the hoped-for momentum can.
*The rapid structural change in the electronic and - to a lesser extent - the automotive industryflows a Structurally increasing propensity to import, especially for components and parts from Japaneseland company. The trade surplus tends to decline.
*The future annual growth rates will be at a significantly lower level than in that Leveling off the past: Overcapacities and overemployment limit the potential for growthth the Japanese economy. Along with elements like aging population, rising socialcost and Saturated markets arise Convergences to the Development of the Western Industri states.
*After the bubble burst, the cost of capital benefits evaporated, and because of the appreciation of the yen wage costs have also risen in an international comparison and should now lead the world rankings.
*Bank failures demonstrate a crisis in the financial system and the need to rebuild private banksstructure and reorganize the controlling authorities. But the Japanese financial system is under pressure Neither does bad credit collapse any more than the economy is under capacity. and Employment overhang.
Soap bubbles burst without any consequencesto let. Hence the buzzword "bubble", which refers to inflation of shares and real estateline prices in Japan in the second half of the 80s referred to that Only part of the reality: the bubble Has Consequences. There are two Links between the ökonomix only seemingly irrelevant speculawave on the Akproperty and real estatemarkets and the real Economy. A verbindingmember is that Credit system that has surrendered to the speculative excesses and must now be rehabilitated at high costs. The second connectionmembers are those in the time of Bubble extremely low captalk cost of Companies. The companymen could have theirs Investments almost to zerofinance tariff; you expanded produccapacity and employment far beyond the need and built Overcapacity that extends until the next Century as an obstacle to growth will prove.
In February 1996, the Economic Planning Agency (EPA) once again announced the long-awaited economic recovery. The signs of the imminent recovery are still "moderate", but clearly noticeable. The EPA relied on three indicators: new orders in the mechanical engineering sector, which increased by 11.5% in the fourth quarter of 1995; moving into new houses and apartments, which grew by 4.8% in 1995; and industrial production, which increased between October 1995 and January 1996. But these indicators are by no means clear. In the mechanical engineering sector, incoming orders are expected to decline again in the first quarter of 1996. Given the underutilized capacity of the manufacturing industry, the demand for machinery and equipment remains unstable. The positive data for moving into new houses and apartments is primarily due to the reconstruction in the earthquake-devastated region of Kobe; they are not based on a national trend. And with regard to industrial production, there is still no stable positive trend. On the contrary, the high level of inventory and the need to reduce stocks tend to suggest a slowdown.
At the same time, however, the problems speak for themselvesquestion side still against a rapid recovery. Private consumption is third in 1995th consecutive yearsunken to 1.1%. The incomes stagnateren, and the proportion of the VerIncome needs increased by 0.9% in 1995 72.5% liked it. The low subnehhugewin - by exceptionmen like halfleiindustryseen - speak against that soon againbeleexercise of investment. Of exports is a negative contributor to the Expect economic growth, and with a further government stimulus in the Tuesdaymension of the administered in autumn 1995parted Spending package of 14.7 trillion yen can be given of growingnot counting the government deficit become. Rather, one must fear that the Low interest ratepolitics - the central bank interest rate is up at 0.5% - ondue to the state deficit finanadornment not onand the interest rate in the middle of the next fiscalyear (April 96 to March 97) raised to 1 or 1.5% whothe must - which increases the prospect of an early recovery continue to deterioratewould tern.
As already became clear two years ago, they are conventional approaches to crisesfight, government spendingPergriefme and the Lowering the interest rate, maxed out. The Goverment Wedyazawa, Hosokawa, Hata and Murayama have the economy insidehalf of four years in total about 60 billion yen, at the current exchange rateselcourse more than US $ 600 billion, in the form of "Stimulus packages" supplied without this one noticeable growth effectwould have put forward. However, those with these stimulus packages must additionally gecreated demand lower are considered to be those officially announced Suggest numbers; nevertheless the last added alone Stimulus for the Japanese peopleeconomy Means equal to the Danish national product to, from which around 40% are considered to be additional demand can.
To what extent the Effect of economic fuelzen on the Growth rate was negligible can hardly be ascertained; In any case, the defenders of the expansive spending policy claim that without the corresponding "packages" one would have had to accept a severe slump instead of stagnation. Their price, however, is a growing budget deficit. Still the beginning of the In the 1990s, Japan was the only major industrial country the one househad excess hold. From the overshot became a deficit that in 1996 4.2% of GDP - or 7.7%if the pension insurance surpluses are not included in the calculation. The Economist if future spending commitments were budgeted, the deficit would rise to 18%. Japan is threatened with a financial crisis like the one the country experienced in the 1970s. Then as now, Deficit Covering Bonds were issued, which, unlike construction bonds, are not used to finance government investments, but to finance the government deficit in general. According to a prognosis of the Ministry of Finance, the share of bonds in the coverage of government expenditures should rise from 17.7% in 1995 to 27.8% in 1999, their share in the national product should rise in the same period from 47 to 55%. This forecast is optimistic insofar as it assumes a significant increase in tax revenues (by 13.5%) from 1997 onwards. According to a parliamentary resolution from the end of 1993, a decision is to be made in autumn 1996 whether the VAT should be increased from the current 3% to 5, 7 or 10%. This would of course be an extremely politically sensitive decision, especially for a conservative government: in 1989 the LDP lost its majority in the House of Lords due to the introduction of VAT, and in 1994 the Hosokawa government failed in its attempt to raise VAT from 3 to 5%.
A new trend is evident in the Foreign trade from: The The trade balance surplus is 1995 for the first time since declined four years. The as considered normal totogetherhang between Growth rate and trade balance differben. In the second half of the 80s was trading overshot as a result of the appreciation of the yen and the Bubble-triggered booms decreased significantly; the Recession from 1991 onwards led to the reverse again Development one. In 1994 the surplus was on the Record level of US $ 145 billion. But since 1993 imports rose faster than exports, and 1995, insspecial in the second yearhalf, the surplus shrank in spite of itholding Stagnation. By 1997 it is said to have been reduced from 3 to 1% of the national product. In January 1996 the foreign trade surplus had even shrunk by 83% to US $ 467 million compared to the same month of the previous year. This decline, which was unexpected in its dimensions, is all the more remarkable given that the Kobe earthquake in the same month of 1995 had already triggered a drop in exports and an increase in imports.
The foreign trade result for January 1996 can partly be compared with the Exchange ratemovegungen des yen to explain. In the spring of 1995 the yen had reached its high of 79.75 per US $ after several years of appreciation; since the summer of the same year it has depreciated again to 104 per US $. The low result of January 1996 could, following the course of the J-curve, reflect a combined effect of the volume effect of the earlier revaluation and the price effect of the later devaluation. However, this only partially explains the development of foreign trade.
The reduction of the surplus must also be called Hebornnis a structurally increasing Import inclination interpreted become. This is based on a rapid structural change the japaniche electronic and - to a lesser extent Extent - automotive industry back. Here you can distinguish two developmentsthe. Heat least they are Foreign investment of Japanese electronic Industries especially in the countries of the East and SoutheastAsia has grown strongly. From costsestablish is the japanical industrygene, Procurement and Produktion, but also Research and developmenttion abroadlagladly; this also increases imports from asiatideveloping countrieswhich increased by more than 27% in the third quarter of 1995 alone, despite the stagnation of the domestic market. For the most part, it was about components and preliminary products from Japanese companies abroad. This trend to relocate production and jobs is likely to intensify. Today only 6% of the production of Japanese industrial companies is generated abroad (US: 20%), and under the current conditions Japanese companies cannot afford to forego the efficiency reserves that lie in the outsourcing of economic activities.
Second, the electronics industry has yespans next to relocating the componentsthfertiin Low-wage countries an ininternationalization push experienced a dramatichange in the Computhanks to the industry. In 1995, imports of office automation equipment increased by 71.5%, telecommunications equipment by 59.4 and electronic components by 69.8. Just three years ago, the Japanese computer market was dominated by domestic manufacturers whose devices ran with the company's own operating systems and were composed of components manufactured at home. Within three years eachbut has turned on the international standard for the Japanese market Operatingsystemen enforced; the Japanese Manufacturers are largely to Montageundertakingquantityworthe one that primarily imported Compouse nents. This change was marked by two shocks, the "Compaq shock" in 1993 and the "Fujitsu shock" in 1995. In 1993 Compaq brought personal computers to the Japanese market at half the usual price; and in 1995 Fujitsu announced that the company would offer personal computers at low prices, even if this would involve losses. Fujitsu increased its sales to over 1 million units and doubled its market share from 9 to 18%. When selling 1.5 million units, the company hopes to return to profitability. It lowered production costs by importing inexpensive components: keyboards from Taiwan, memory chips from Korea, sound cards from Singapore and microprocessors from the USA. The biggest victim of both shocks was NEC, which still dominated the Japanese PC market in 1991 with a market share. In 1995 alone, NEC's market share fell by 6.7 percentage points to 40%. But NEC has also adapted to the new developments and increased the proportion of imported components in desktop computers from 20% in 1992 to 90% in 1995.
The imports of automobile parts increased by 38.4% in 1995. The automotive industry is also relocating a growing part of its procurement abroad, primarily to the USA. The US-Japanese dispute over import quotas, which was still making headlines in April 1995, has thus been overtaken by developments: The large Japanese automobile manufacturers are also being forced to reduce their costs and resort to cheaper imports.
The tendency of the Japanese economy to import will also continue to rise because barriers in the domestic distribution system (wholesale and retail) have been dismantled. This is less due to the government's dismantling of administrative regulations, which is proceeding slowly, than to the still high valuation of the yen, even after the devaluation tendencies of last year, which has prompted some retail chains to resort to imports. For the first time, the appreciation gains of the yen were passed on to consumers to a significant extent via price cuts. This has been called the "price revolution", certainly a dramatic exaggeration. For individual products and product groups, however, a decline in prices as a result of increased imports is unmistakable - even if it is not reflected in the consumer price index.
As always the short and medium term concyclical Perspectives to be assessed: The average annual waxrates of the Japanese peoplehostin the future will be far below those of the Verlie in the past. The forecast of 2% waxtum for 1996 is already considered an optimistic - and 2% One would have growth in yespan just a few minutes ago Years as a sign of a recession. It gives a porridgeten consensus that the current Stagnation marks the transition to a "mature industrial ge."society "with low waxguesswork, one aging population, soaringextra costs and saturated markets markiert. This assessment is of course not new: since the oil crisis in the 1970s, the end of "catching up development" and the beginning of the stage of maturity have been noted time and again. Nonetheless, companies and the state pursued strategies that promoted an extremely high investment rate compared to industrial countries until the 1990s. The Japanese economy, which has long since matured, was still showing an investment rate in the early 1990s that is typical of a successful developing country. In terms of the share of investment in equipment in the national product, the differences between Japan and the other industrialized countries have increased in the 1980s compared to the 1970s. One reason for this was an undervalued currency in the first half of the 1980s, which allowed exports to expand; and in the second half of the 1980s, Japanese companies were able to finance their investments at an extremely low cost of capital, not least thanks to the bubble economy. The result is that Japanese companies have built massive overcapacities in the world's most expensive location. One example is the automotive industry: In the 1980s, Toyota, Nissan and Mazda invested the equivalent of US $ 3 billion to build four highly automated manufacturing plants in Japan, which began to operate at full capacity in the early 1990s. None of these plants has been operating at full capacity since 1992 (Nissan alone took the initiative and announced the closure of an automobile plant in 1993). In a heroic overestimation of the future market development, investments were made - not only in the automotive industry - that will yield no or only low rates of return for a long time.
The physical production capacities, which will exceed demand and lower the investment rate well into the next century, are not the only problem: Japanese companies posed in the 1980s - following the myth that the aging of society would quickly lead to a shortage of available labor import - to an extent that is now proving to be excessive. However, unlike their European and American counterparts, companies cannot lay off a large number of workers; they are forced to "hoard" workers.The system of "lifelong employment" in large corporations can be undermined in a number of ways, but open mass layoffs and rapid downsizing are not possible. This applies in particular to the area of permanent white collar workers, who make up 50% of the Japanese manufacturing industry Many large companies have announced that they will cut their jobs - without mass layoffs. Unlike American and European companies, which have been brutally "restructured", Japanese companies can at best tackle their overemployment in the long term - by reducing new hires or While this undermines the "lifelong" employment system as fewer workers enjoy "lifelong" employment, the official unemployment rate remains low, the opposite of high unemployment in Europe, in-house unemployment is in Japan. So far, Japanese workers have been spared the shock of mass unemployment, but strong uncertainty about the stability of employment has spread.
It won't do Japanese companies anymore be possible to get out of with the overcapacity and overemployment related problems "outexportieren "would it neither the US nor the EU will accept if one new wave of Japanese exports the domestic Markets overran and production and arjobs would be at risk. On the other hand, and this is the more important acepect, are the japanese Company on the costpage today, especially as a result of the still high valuation of the yen, less competitionmore competitive than in the past. After the bubble has burst, the advantage is there lower cost of capital volatilized. On the contrary, companies today have to repay warrant bonds that they suspected would be converted into shares (the auto industry alone had issued ¥ 820 billion in warrant bonds during the bubble years). Due to the yen-aufThe wage costs are also valued international comparison increasedgen and should now top the world rankings. And last but not least, the Japanese export companies suffer from the high prices for locally sourced primary products (such as steel) and inputs such as energy, water, transport, land, services, etc. Since the domestic market is stagnating, the exporters can no longer do so thanks to the high domestic prices Make high profits in the domestic market to finance the export offensives. Instead, they have to adjust the prices of their products on the foreign markets to the increased costs. In addition, many Western competing companies have successfully restructured themselves, so that Japanese exporters are often confronted with stronger rivals today than they were in the 1980s.
Overcapacity and overemployment will be the Growth opportunities for the Japanese economy also in the futurerestrict. The current one So stagnation is not just a pointpoint out the "Maturity" of the Japanese economy, it is also a Result of the overinvestment in the Verpast, which will keep the economy well into the next century will strain into it.
Since the end of 1995, the coverage of the Japanese media has concentrated on one phenomenon: The Jusen, seven mortgage banks that have fallen into the red due to their risky lending in the bubble and are now - as the budget for the fiscal year 1996/97 provides - with help should be triggered by taxpayers' money. The release of the Jusen will cost the Japanese citizens 5,500 yen (about 80 DM) per capita. Nine out of ten Japanese have spoken out against the use of taxpayers' money in surveys, and the initially high popularity of the pemier Ryutaro Hashimoto has fallen by 10 percentage points due to the restructuring plan for the Jusen. In the mayoral elections of Kyoto, a candidate supported by all non-communist parties was only able to beat his rival, who was only supported by the communists, by a hair's breadth - also an indication of the anger of the population caused by the Jusen affair. In order to steer the discontent at its own mill, the opposition party Shinshinto has made itself the advocate of the majority of the population in a parliamentary farce and blocked the budget sessions of the parliament with a sit-in strike. According to the FAZ, Prime Minister Hashimoto had to "fear for his artful pomade hairstyle" in the fights that occurred here. Despite its farcical character, the sit-in strike is of great political importance not only because it prevents the budget for the fiscal year 1996/97 from being passed on time, but also because it threatens to split the governing coalition, especially the dominant LDP. As the spokesman for an LDP minority group whose members fear for their parliamentary seats in the next elections, MP Junichiro Koizumi has already called for the Jusen issue to be removed from the budget. It is not ruled out (but also not likely at this point in time) that the dispute over the Jusen will lead to a government crisis and lead to new elections.
The Jusen were founded in 1971 by the large commercial banks in order to provide funds for financing private households' housing. Of course, they abandoned this original task in the years of the bubble when they turned to financing construction and real estate transactions - not least because they were exposed to the growing competition from their founding banks in the mortgage business. At a time of rapidly rising real estate prices, when the land value of Japan was officially estimated at 60% of the land value of this planet, it seemed attractive to consolidate and "develop" smaller plots of land in central Tokyo and Osaka into larger units by adding higher-quality office space created. The entire banking system tied its lending more and more closely to the real estate market, be it real estate being accepted as collateral - with real estate lent up to 120% of its market value in the expectation that the price increases would fill the gap within a few months, be it that the purchase and "development" of real estate was funded directly. The increasing interlinking of the credit system with the real estate market was eventually viewed as critical by the tax authorities, and in March 1990 the Treasury prohibited banks from increasing their lending to the construction and real estate sectors faster than their lending as a whole. From 1991 onwards, bank lending to the real estate sector fell to practically zero. The mortgage banks, of course, did not fall under this provision and expanded their real estate business.
In the 1980s, real estate prices had diverged far from the level of income (rents) that could be obtained from the use of the real estate acquired. Like shares, land was not primarily bought in anticipation of high income, but rather future increases in value. Above all, however, the future need, especially for office space, had been massively overestimated. In 1993, 16% of the office space available in Tokyo's 23 inner districts was vacant, and that percentage will have increased in 1994-96 due to stagnating economic development (according to the real estate consultancy Halifax, the vacant office space in the three central districts extends to all of the office space Hong Kong). After the bubble dried up, not only share prices but also real estate prices fell, to a degree that is not recorded by the official real estate price index of the National Land Agency. Landowners who want to sell real estate in the central districts of Tokyo or Osaka have to be satisfied with 40 to 50% of the purchase price in 1990: if one extrapolates the depreciation of 50 to 60% on the total land value of the large cities, the Japanese economy would have in only a loss of DM 17 trillion in value over four years. Of course, this is a theoretical figure, as the landowners only really sell their properties in rare exceptional situations. In fact, transactions in the real estate market have come to a standstill, as landowners and banks fear nothing more than the massive sale of land, which would reveal the prices that are really clearing the market, convert the theoretical into real losses and devalue the banks' loan collateral. As immobile the real estate market is, the market for renting office space is as flexible. The renegotiation of leases and discounts of up to 60% are the rule.
The result: the income of the construction, real estate and development companies is insufficient to service the loans taken out. The companies either had to declare bankruptcy or continue to reorganize to service their debts. In this way, the financial institutions that had committed themselves to financing the real estate business were also dragged into the bankruptcy vortex. This includes the Jusen in a prominent place: Of the more than 12 bio yen in outstanding balances of the Jusen, 74% can be classified as non-performing, half must be written off as a loss, a quarter could be saved by selling the loan collateral.
Legally, the Jusen belong to the "non-banks", i.e. according to Japanese regulations they are not allowed to hold deposits, but have to finance themselves through bank loans. They do or did their business by lending their funds to real estate and construction companies and thus to "risky customers" at a higher rate of interest. With the de facto bankruptcy of the Jusen, the risk returns to the banks that the Jusen had provided with loans: The Jusen founding banks have to write off around 3.5 trillion yen in loans, while other commercial banks have to lose 1.7 trillion Bear yen. The Jusen affair became a political issue because the agricultural credit cooperatives were responsible for the bulk of the Jusen financing with 5.5 trillion yen in loans. The agricultural credit cooperatives originally had the task of collecting deposits from the farmers and financing agricultural or agricultural activities. In practice, however, only a quarter of the cooperatives' loans went to agriculture and related areas. By providing the Jusen with funds instead, the cooperatives were able to earn higher interest rates and indirectly participate in the blessings of the real estate boom. It must be taken into account here that the cooperatives, thanks to the subsidization of agriculture, the high incomes in the countryside and the often considerable financial fortunes of farmers who were able to sell land near the big cities, had extensive resources at their disposal, but at the same time were not managed very professionally.
The political significance of the Jusen affair lies in the fact that, unlike the banks, according to the government's restructuring plan, the agricultural credit cooperatives get back all loans to the mortgage banks. Instead of the credit cooperatives, the state, i.e. the taxpayer, steps in. The loans of the cooperatives are treated like bank deposits, the security of which is guaranteed by the state if they do not exceed the sum of 10 million yen. The reason for this preferential treatment is easy to determine: the ruling LDP relies on the political support of the peasants. In detail, the Jusen reorganization provides for the formation of a processing organization (Jusen Disposal Organization), which is to operate with the remaining assets of the mortgage banks, which may be saved through property sales, with bank loans and fresh loans from the agricultural cooperatives. The redevelopment is subsidized with 685 billion yen (approx. 10 billion DM) tax money. The tax burden of around 80 DM per Japanese citizen does not seem to be so great that it justifies the public outrage. But it is less the sum of 5,500 yen that is causing outrage than the circumstances under which the Jusen got into crisis. Although the government asserts that those responsible for the Jusen crisis will be held accountable, in this particular case it is difficult to determine the responsibility. Participating in it are: the management of the Jusen, the founding banks and the agricultural cooperatives, including the Norinchukin Bank, the "central bank" of the agricultural cooperatives (the seventh largest bank in the world), which misjudged credit risk; the debtors of the Jusen, mostly bankrupt construction and real estate forms, other financing companies, golf course developers, etc. to a considerable extent but also organizations of the underworld (Yakusa) who discovered real estate transactions as attractive alternatives to their normal activities during the years of the bubble ; and last but not least, the authorities: the Ministry of Agriculture, representing the interests of the agricultural cooperatives, the central bank and, above all, the Ministry of Finance. The Ministry of Finance, so the allegation, had exempted the Jusen from the ban on the further expansion of real estate transactions, and last but not least, former officials of the Ministry of Finance filled five or two of the seven chairman and president posts at the failed mortgage banks in 1990. The practice of amakudari, of changing high officials after completing their careers to highly paid posts in the private sector, mostly in the branches that they had previously regulated, turned out to be disastrous, especially on the basis of the Jusen affair.
The Jusen are a comparatively small segment of the Japanese credit system. The collapse of five other credit institutions in 1995 - two credit unions, two credit associations and a regional bank - shows that the problem of non-performing loans, because they are linked to stock and real estate transactions, is by no means confined to Jusen. The losses of the seven juses amount to 6 bio yen in the best case, and 12 bio yen in the worst case. The volume of real estate market lending in one way or another, i.e. both direct real estate deals and other loans for which real estate has been accepted as collateral, is estimated at 450 trillion yen, or 80% of the credit system's outstanding debts. The Treasury Department states that 37 trillion yen in outstanding loans should be classified as non-performing, independent observers expect a much larger sum (CIA: 80 trillion). What, it must be asked, about the rest of the problem loans?
First, there are the 19,000 non-banks - consumer credit companies, leasing companies, credit card, mortgage and other finance companies - 60% of whose lending went to construction, real estate and development companies, other non-banks, which in turn financed real estate transactions, and to companies which did not originally belong to the real estate sector, but were active in it during the years of the bubble. The volume of non-performing loans from these non-banks is estimated by the business newspaper Nihon Keizai at 40 trillion yen. Some of these non-banks went bankrupt, such as the Aichi Co. and Equion Co. in February 1996, without causing a major stir, and one of the most famous institutions, Nichiboshin, has already undergone its second restructuring. Overall, around 40% of non-banks are said to be in difficulty. The question is what will happen to the creditors of these non-banks? As long as the big commercial banks are concerned, no major difficulties are to be expected. It is different with the local credit associations or secondary regional banks, which themselves have got into difficult waters; Breakdowns in this area will be inevitable. And the agricultural credit cooperatives come back into play too: They lent 4.7 trillion yen to non-banks, a sum that is not much smaller than their loans to the seven mortgage banks.
The weaker segments of the Japanese banking system will face severe stress in the near future. This affects the more than 450 credit unions and credit associations that should actually collect deposits in their local area and provide their members, primarily local small business owners, with loans. Of course, the associations and cooperatives were also involved in the real estate business either directly or through the non-banks, such as the Tokyo Anzen and Tokyo Kyowa, which went bankrupt at the beginning of 1995. At Tokyo Kyowa, the largest borrower had been the cooperative's president, Harunori Takahashi, who owned golf course development company EIE, one of the typical bubble companies that buys and sells golf courses and hotels in the Asia-Pacific region Yen had been able to accumulate. But this also applies to the weaker regional banks, one of which, Hyogo Bank, became a restructuring case in 1995. Unlike the large commercial banks, the regional banks have no or only insufficient hidden reserves that they could use as collateral against bad and bad loans.
The eleven large commercial banks (City Banks) themselves are not in immediate danger. The share of non-performing loans in their outstanding debts is estimated at 4.7%. Around 25% of your loans are said to be directly related to real estate transactions, but it should be higher if the real estate brought in as collateral for other loan transactions is included. In particular, a large part of the loans to small businesses to which the banks increasingly turned in the 1980s - their traditional customers, the large-scale companies had long since found cheaper sources of finance - will be covered by real estate. But the City Banks are the largest shareholders in Japanese industry and, in the form of large blocks of shares, have sufficient hidden reserves to deal with a possible credit crunch. However, the value of these hidden reserves depends on the stock index and thus on a variable variable. The Nikkei index is currently between 20,000 and 22,000 points, at a level that the banks are not worried about. However, should it approach the 14,000 point limit again - as in the summer of 1993 - some of the large commercial banks would also get into difficulties. - More problematic is the situation of the three long-term credit banks, in which the proportion of non-performing loans officially accounts for 7% of the outstanding debts, and the seven trust banks, in which this proportion is 12%.
When it comes to using taxpayers ’money to trigger banks at risk, one should also remember the Cooperative Credit Purchasing Corporation (CCPC), founded in 1993 by the banks and the government. The task of the CCPC is to buy bad loans from the banks at a discount price and to settle the outstanding debts by selling the collateral. According to official information, the CCPC had acquired 10.3 trillion yen in "bad" loans by the end of 1995. By selling collateral, she has only recovered 4% of that amount so far. The creation of the CCPC enabled the banks to reorganize their balance sheets, but at the cost of establishing a new collection point for "bad loans". The creation of the CCPC, which has a life span of 10 years, has the positive effect of preventing the write-off of loans and the sale of collateral at dumping prices, in the expectation that the passage of time and inflation will solve the credit problem. But how do you deal with the credits collected at the CCPC if the problem has not disappeared by 2003?
The rescue of the Jusen is only one step on the way to the rehabilitation of the Japanese credit system, with the use of taxpayers money. It's not the first step. As early as 1995, the central bank had granted 1.2 trillion yen (DM 17 billion) in loans to rescue companies for stranded banks - without collateral. And it is by no means the last step. It almost seems as if the bank failures of 1995, which, contrary to Japanese tradition, took place in the public spotlight, had the function of getting politicians and taxpayers in the mood for far greater burdens.
The Japanese financial system is under pressure bad loanssowenig collapse like that yespaniche hostunder the capacity and employmentoverhang. Nevertheless it will be in the Finanzsystem are likely to have surprises: To the collapse of smaller banks (creditkooperativen, Kreditassoziations and Regional banks), to thehuman influence larger commercial banks (as in April 1996 Mitsubishi Bank with Bank of Tokyo; that will in all likelihood a merger of Daiwa Bank with Follow Sumitomo Bank) and - further onfuture - to mergers of Long Term Credit and Trust Banks with the City Banks. From the to expecting mergers will be the largest banks the worldwalk. However, the has priority Size - measured in terms of market share - is not insignificantlich beige to the current banking crisiswear: like that Industrial companies also have the Japanese Banks to the marketpart ininstead of the rates of return too big upattention paid. Hence the ororganizational restructuring of the banksector from a factual restrukdorietion of banking activitiessamemust besen. In this context, a reduction in the branch network and employment - the latter was announced by three major banks in February - will be inevitable.
Just as important as the restructuring of the private Banks is the reorganization of the controlling Authorities, primarily the Ministry of Finance. For example, a minority group of opposition politicians such as the governing parties is currently splitting the Ministry of Finance into at least two units, one of which is to be entrusted with the state budget and a second with the control of the banking system. The dereregulation of the financial system without imple mentationestablishment of independent supervisory bodies is one of the Reasons why the credit crunch is taking its toll that she has achieved today. To Reorganization of the bankensystems also belong a change in the balance sheet control, which the "Ver"Bad loans are stuck in the bookssword, and a strengthening of deposit insurancetion. The assigned to the Ministry of Financenete Financial System Research Council suggests a sevenfold increase in the Funds for deposit insurance; In addition, tax money for bank restructuring is only to be used for credit unions, and these will only be used for five years.
In industry, a transition is the mamanagement priorities from the emphasis on the Market share at the rates of return already underway. This will be the side of the shareholders at the expense of the in-house management and the workforce strengthen; whether with it - like that Economistpresumed - the Japanese model of stakeholders company for the benefit of the Saxon shareholders company will be a thing of the past at least questionable. Because many of them according to the pattern the stakeholder company organized Japanese Firms are still in growth sectors extremely competitiveadvertisable. In the semiconductor industry, whose demand grew 40% in 1995, Japanese companies hold 39.5% of the world market, compared with 39.8% in the US, 12.1% in Asia excluding Japan, and 8.6% in Europe. The semiconductor manufacturing equipment market in particular is dominated by Japanese companies. In the production of flat screens, Japanese companies lead the world rankings with an output of 1.63 million units per month; the closest competitor, South Korea, has 120,000 units. Japanese companies play a leading role in the development of new information and image carriers (laser disks, etc.), and last but not least, the emerging market for car navigation systems, the connection of electronic road maps with the infrastructure of traffic control systems, could become an attractive field of expansion for Japanese companies become.
But that is only one side of the coin. The long-protected companies in the paper, cement, rubber or petrochemicals industries, who could only protect themselves against imports through cartel-like arrangements, and who offer their products at extremely high prices (for example, a large building materials company sells a ton of cement domestically for 10,750 yen and exports them at 3,500 yen) have become a burden on the modern export industry. Their interest group, the employers' association Nikkeiren, is therefore also in favor of opening up the market in order to tackle the low productivity and high prices in industries that are not exposed to international competition. But also many service companies - hairdressers, travel agencies, restaurants, wedding agencies - that were founded by larger companies not to make a profit, but to take on surplus employees, will hardly survive the structural change. One may doubt whether restructuring the economy will succeed at the expense of less productive industries - but if it does succeed, Japan will hardly be able to maintain its low official unemployment rate of 3.5%.
© Friedrich Ebert Foundation | technical support | net edition fes-library | March 1998
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