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2008年10月 5日 (日)


(Oct. 5, 2008) The Yomiuri Shimbun

Bailout on its own is no magic bullet

金融安定法成立 早くも求められる次の一手(105日付・読売社説)

After twists and turns, a financial bailout bill has at last been signed into law in the United States.


The legislation has been touted as a "trump card" to save struggling U.S. financial institutions. But some of those institutions have themselves pointed out that the package is not user-friendly. Additional measures will be needed to prevent the financial crisis from worsening.


One of the pillars of the bill is to allow the U.S. administration to spend up to 700 billion dollars to buy up soured mortgage-related securities and other devalued assets held by ailing financial institutions. The U.S. House of Representatives passed the bill by a majority vote Friday.


When the House rejected the bailout bill Monday, the Dow Jones Industrial Average plunged 777 points, its biggest-ever single-day fall, roiling markets across the world.


If the House had rejected the bill again, the markets would have been further destabilized, and the global financial crisis would have intensified. It is good news that the House passed the bill by a large majority.


As the Senate had already passed the bill Wednesday, U.S. President George W. Bush signed it into law immediately. The bill's passage into law marks progress in avoiding a financial meltdown.



Revisions to bill questionable

The bill's passage at the House on a second vote became possible because it was altered by adding provisions to enhance the protection of depositors and extend tax breaks. After the bill was modified, many representatives who had opposed the injection of public finds changed their stance.


Several of the revisions to the bill strike us as having more to do with congressional election campaigns than with financial stabilization. Although these pork-barrel add-ons will further deplete the United States' coffers, there was no choice other than to pass the bill to forestall a full-blown financial crisis. The immediate task for U.S. authorities is to use public funds to buy up bad assets held by struggling financial institutions.


But a cause for concern is that the bailout plan contains many unclear points that will become apparent when it is actually implemented.


For example, setting the price at which bad assets are purchased poses a dilemma: If prices are set high, the public burden will balloon; if they are set low, the fiscal soundness of bailed-out financial institutions could be compromised.


Some point out that public funds should be injected not only to buy up toxic assets, but also to boost the capital bases of enfeebled financial institutions. This is because many of these institutions are suffering from a shortage of equity capital--a problem that will become increasingly evident.



Policy coordination vital

In the United States, there is a real possibility that a vicious circle will develop in which the financial crisis undermines the nation's real economy, producing further financial instability.


In Europe, buffeted by the U.S. financial crisis, four major countries including Britain and France have just held a summit meeting to discuss countermeasures.


In Japan, also, there are growing signs of a business downturn. The employment situation and corporate business performances have been deteriorating rapidly.


At this time, it is crucially important for Japan, Europe, the United States and others to closely cooperate with each other to strengthen policy coordination.


(From The Yomiuri Shimbun, Oct. 5, 2008)

20081050149  読売新聞)


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