|| -----Original Message-----
|| From: Charles Jannuzi
||
|| But just look
|| at the select group getting behind Bush on his Asia and Japan policy:
||
|| Prudential, GE Capital, Salomon Brothers, Newbridge Capital
|| Corp. JP Morgan,
|| Goldman Sachs, Ripplewood Holdings, and Carlyle Group (any
|| surprises with
|| this last one?) .
||
|| Here is how they are going to wreck Japan and Korea and plunge
|| Asia into a
|| new crisis.
||
|| First, they (Pres. Bush is their key rep, along with Sec.
|| O'Neill) will push
|| for the most drastic evaluation of the 'bad loans' at Japanese
|| and Korean
|| banks.
||
|| Second, they will take over many Japanese and Korean bank, insurance and
|| real estate groups. This will also allow them to take over many other
|| companies as well.
||
Though you might be interested by what "liberal" Brookings thinks of all this. As is happening in Turkey, taxpayers have to shoulder the bad loans and foreign banks are invited in to grab up the banks at fire-sale prices.
http://www.brook.edu/views/op-ed/litan/20010810.htm
Capital Idea: Open Japan's Banking Industry
The Asian Wall Street Journal, August 10, 2001
Robert E. Litan, Vice President and Director, Economic Studies Adam S. Posen, Senior Fellow, Institute for International Economics (...) So the fix for Japan's banking crisis clearly has two parts: Bad debt (and the associated real estate as collateral) must be removed from the banks and handed over to the government for resolution. To its credit, the Koizumi government realizes this and has recently proposed moving all nonperforming loans out of the banking system.
But the second part is recapitalization, and the government has not explicitly addressed this task. Where will the vast sums of money needed be found? Not from the Japanese banking system itself, which has been unprofitable for years and has no more capital left to give.
[Explains here that nationalisation won't work bec it'll lead to patronage and acquisition by Japanese conglos won't work bec it'll resurrect zaibatsus]
That leaves one other source of capital: foreign financial institutions, which can bring to the Japanese economy not only money, but also the lending and risk-management practices that have made them successful in world markets [as you've noted, but with an entirely different meaning]. The experience of other countries (like Australia and Argentina) receiving foreign-direct investment into their financial sector indicates that transfer of technology and best corporate governance practices does occur in banking, as in most other industries that have attracted FDI. This process has already begun with the Ripplewood Holdings purchase of the once-nationalized Long-Term Credit Bank from the Japanese government, as well as the expansion of foreign merger and acquisition activity throughout Japanese financial markets. (...) There is no sustained solution to Japan's economic problems without bank reform, no effective bank reform without recapitalization, and no viable recapitalization without foreign capital. The sooner Japanese leaders and the Japanese public come to accept this logical conclusion, the better off Japan and the rest of the world economy will be.