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2008年10月28日 (火)


(Oct. 28, 2008) The Yomiuri Shimbun

Fast action needed on plummeting stocks

バブル後最安値 与野党協力し対策実現急げ(1028日付・読売社説)

Stocks appear to be in free fall.


The key index of the Tokyo Stock Exchange on Monday dropped 486 points from Friday to close at 7,162, falling past the post-bubble low registered 5-1/2 years ago and hitting its lowest point since October 1982.


Although the government unveiled a second package of emergency measures the same day to cope with sharp falls on the stock market, it did not help stop the plunge in stock prices.


Market sentiment is thus too gloomy to positively respond to the government measures.


The government, the ruling parties and Bank of Japan must employ all available measures to strengthen financial functions and positively affect the economy. They must do their best to eliminate the anxiety that has been clouding the market.


Under the new emergency measures, the amount of state funds that can be injected into regional banks and other financial institutions will be increased from the initially planned 2 trillion yen to 10 trillion yen. The new package also includes a plan to review the method used to calculate the capital adequacy ratio of banks so that the ratios will not be lowered due to increases in latent stock losses.



Strengthen systems

These measures to strengthen financial functions will help stabilize financial systems and prevent banks from becoming overly reluctant to lend. The ruling and opposition parties should cooperate in promptly putting the measures into effect by taking necessary steps such as revising the relevant laws.


The purchasing of stocks held by banks by the Banks' Shareholdings Purchase Corporation with the use of government funds also will be resumed. The Bank of Japan, which purchased such stocks in the past just as the government did, also should cooperate.


The government needs to work quickly on fleshing out the fine points of the measures such as whether it is necessary to provide additional funds for the BSPC to purchase such stocks.


If the decline in stock prices is not arrested even after exhausting these measures, another option the government could consider is using public funds to shore up stock prices as an ad hoc measure.



Falling stocks, rising yen

A major factor behind the continuing decline in stock prices is the appreciation of the yen. The Group of Seven major nations issued an emergency joint statement, in which they indicated they may jointly intervene against the sharply rising yen. But even after the statement was issued the yen continued rising.


The market is closely watching whether the G-7, which showed strong concern over excessive fluctuation in the yen, would actually move for joint intervention to stop the yen from rising or go no further than mere "verbal intervention."


Sharp rises in the yen are not desirable as it may seriously damage export industries. A strong currency, however, is a barometer of economic strength.


Unlike past drops in stock prices, the nation has not seen the "Japan-selling" associated with depreciation of the yen. This indicates that investors worldwide are positively evaluating the Japanese economy as being stronger than those of the United States and Europe.


As the yen rises, the cost of imports such as crude oil falls. If industries make painful structural reforms, the nation's economy could gain even more strength.


(From The Yomiuri Shimbun, Oct. 28, 2008)

200810280126  読売新聞)


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