RE: Japan

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L:26476] Japan

It strikes me that Moody's did to Japan what the IMF did to Argentina and a lot of other countries. It will raise the interest rates that Japan has to pay... It's like a movement by finance capital to punish countries that don't live up to neoliberal ideals. But in this case, Moody's isn't held responsible by anyone. Even the IMF has to answer to its stockholders (the US and other rich countries).

Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine

> -----Original Message-----
> From: Ian Murray [mailto:seamus2001@xxxxxxxxx]
> Sent: Friday, May 31, 2002 11:16 AM
> To: pen-l
> Subject: [PEN-L:26476] Japan
>
>
> [The Guardian]
> Japan furious at credit downgrade
>
> Staff and agencies
> Friday May 31, 2002
>
> Just as the Japanese government was reassuring the world that its
> economy was picking up, Moody's Investors Service today cut the
> country's credit rating by two notches.
>
> The move marks the second credit rating cut in six months and ranks
> Japan, the world's second biggest economy and largest creditor nation,
> in the same league as Cyprus, Greece and Latvia.
>
> The downgrade provoked a furious response from Haruhiko Kuroda, the
> finance ministry's vice minister for international affairs, who called
> the downgrade "completely inappropriate" and demanded an explanation.
>
> "Of course we want them to reconsider, and we will be requesting that
> they do just that," he added.
>
> The cuts follow similar downgrades last month by Standard &
> Poor, which
> blamed the lack of progress in government reforms to tackle
> public debt.
>
> Moody's slashed its rating for yen-denominated domestic securities
> issued or guaranteed by the Japanese government by two notches, to A2
> from Aa3. Moody's last cut the rating in December.
>
> The agency said the level of government indebtedness "will approach
> levels unprecedented in the postwar era in the developed
> world, and that
> as such Japan will be entering 'uncharted territory'."
>
> By the end of March, Japan's public debt stood around 675,000 billion
> yen (£3,800bn) or about 135% of gross domestic product, higher than
> nearly any other industrialised country.
>
> The prime minister, Junichiro Koizumi, has promised reforms
> to clean up
> massive bad debts at Japanese banks, rein in public spending and turn
> over money-losing public businesses to the private sector. He has also
> pledged to cap new government debt issues at 30,000 billion yen.
>
> But many analysts say Japan's decade-long economic slump is far from
> improving, and warn that lawmakers are failing to grasp the
> magnitude of
> the crisis.
>
> The problems are only made worse by Japan's ageing population, which
> will force the government to spend more on health and
> retirement, and by
> bad loans overhanging private banks.
>
> Moody's predicted that domestic debt would worsen over the next few
> years but that several features would prevent Japan from
> plunging into a
> medium-term crisis. Among them were Japan's high household
> savings rate
> and the small scale of the government's exposure to foreign creditors.
>
> Japan's benchmark 225-issue Nikkei stock average fell 6.33 points, or
> 0.05 percent, to 11,763.70, erasing morning gains on news of
> the Moody's
> downgrade.
>
>
>