Re: Top Japan banks seen posting 01-02 net loss

["Charles Jannuzi" <jannuzi@xxxxxxxxxxxxxxxxxxxxxxxxx>]

>Japan banks seen posting 01-02 net loss


> How is this news?  I have been hearing for some time now that the Japanese
> banking system was in disaster mode.  And yet it seems to be surprising
that
> they will not make a profit.  >What am I missing?

I'm not sure I'll answer your questions, but a few comments if a I may.

Capital adequacy ratios are adequate, so why should anyone panic? You can
float a bank at 4% unless you have to make the international bankers happy.

The banks aren't in disaster mode, the economy is. No amount of writing
'bad' loans off is going to reflate the economy, and in fact, the effect is
going to be the opposite if those loans are collected on or sold off to the
vulture cap artists.

The banks have actually enjoyed profits quite a bit just from the spread
between interest paid on savings and interest paid them on loans. There are
few other ways to make money long term in retail banking. They don't even
have checking accounts to nickel and dime you to death on, though businesses
use a special account that works somewhat like a checking account. So far
the use of ATMs is free so long as it's on a related bank and not after
regular hours.

Now they are combining some Japanese techniques with western banking ones.
They are playing with stock values to help profitability (this is crucial
with the insurance companies, many of which are linked to the banks) even as
they unload cross-held shares in companies (I think this is mostly Japanese,
though playing with stock prices seems to have been perfected in the US).

And now they are introducing western style 'risk assessment' and 'risk
management'--which means more actively managing the loan portfolios and
applications. And they are writing off huge amounts of losses, just like
western banks do. There is no shame in the banking world, is there?

None of this, none of this, none of this is going to reflate the economy.
But it's what the US, the IMF, and the 'markets' want. Since most of the
interests involved with US and IMF 'Japan policy' are fairly ignorant of
Japan or just flat out prejudicial (Japan is an imicical threat to the form
of western capitalism dominated by the US), I predict far more trouble
ahead.

I look for some big banking groups to end up in western hands soon, unless
the economy turns around and the rising tide raises all those little boats
(the loans still held). But so far the 'market-approved treatment' is like
helping someone who has severed an artery by handing out lots of clean
towels to wipe up the floor. The only thing that is going to turn around and
reflate the economy, I think, is a yen at 150-160 to the dollar, and that
just is not going to happen since neither China nor the US want it. Instead,
what Japan is going to get is a still overvalued yen with oil turmoil, the
last two things it needs, along with a third undesirable--an even more rigid
trade structure vis-a-vis the NAFTA and EU blocs.

Charles Jannuzi