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2008年10月11日 (土)


(Oct. 11, 2008) The Yomiuri Shimbun

Expedite efforts to rebuild safety net

金融危機波及 安全網の立て直しを急げ(1011日付・読売社説)

The financial crisis engulfing the United States and European nations has finally spilled over into this nation.


Yamato Life Insurance Co., a midsize life insurer, went belly-up Friday, while the Nikkei Stock Average, which had just dropped below the 10,000 mark, nosedived to below 9,000.


The situation surrounding the Japanese economy has suddenly grown tense due to the first bankruptcy of a Japanese life insurance company in seven years and the stock market free fall. To prevent an open seam in the Japanese financial system from developing into a major rupture, it is essential for the government to implement additional economic stimulus measures and expedite work to build a safety net to support the financial system.


To minimize adverse effects from the financial crisis on the nation's economy, efforts must be made to grasp what the recent seemingly bewildering spate of developments means, and concrete steps must be taken calmly to deal with the situation.


Yamato Life collapsed due to its aggressive asset-management strategy, geared to seek high returns. But many of Japan's life insurance companies and banks learned bitter lessons from the bubble economy of the late 1980s and early '90s and have since made solid investments.


The wounds that the Japanese economy has suffered are superficial in comparison with those inflicted on the United States and European nations. Japan is by no means facing a serious crisis.



Wrong time to drop guard

It is true, however, that Japan's economy has entered a cautious phase. Beefing up the nation's crisis preparedness again is essential because the guard raised against a possible financial meltdown during a financial sector-triggered recession several years ago has been lifted, and crisis preparedness has returned to a normal level.


The use of taxpayers' money by the Life Insurance Policyholders Protection Corporation of Japan, which helps holders of life insurance policies sold by bankrupt companies to protect their assets, will be terminated at the end of March. The Financial Function Early Strengthening Law, which enables the injection of public funds into small and midsize financial institutions, expired at the end of March this year.


Their terminations were decided after it was judged that they were no longer necessary because fears over the nation's financial system had subsided.


But the situation has changed, as evidenced by the collapse of Yamato Life, which came on the heels of the virtual nationalization of the biggest U.S. insurance company, AIG, and the deteriorated financial health of regional banks in Japan. Given the situation, scaling back the safety net is not appropriate and should be reconsidered.


Urgent steps must be taken to deal with ominous signs in the real economy as well. The appreciation of the yen has pushed exports downward, slashing corporate profits. Plummeting stock prices have reduced financial assets held by individuals, thereby damping consumption. Due to the cooled real estate market, New City Residence Investment Corp., a real estate investment trust, went bankrupt Thursday, becoming the first such company listed on the Tokyo Stock Exchange to go bust.



U.S. key to overcoming crisis

Following drops in demand overseas due to the slowing global economy, the Japanese economy has been hit by declines in domestic demand in the fields of capital investment, consumption and housing.


Tax incentives for investment and corporate tax cuts would help the private sector regain vitality. To stimulate the stock market, the preferential tax system for securities, due to expire at the end of this year, should be extended and expanded.


Of course, when it comes to dealing with this financial fiasco, the key is whether the United States--the epicenter of the financial crisis--can adequately respond to the situation.

(アメリカの出方がこれからの世界経済の行方を左右する by srachai

At Friday's meeting in Washington of Group of Seven finance ministers and central bank governors, the government should press the United States to take sweeping measures, including the injection of taxpayers' money into financial institutions, so it can ride out this financial crisis.


(From The Yomiuri Shimbun, Oct. 11, 2008)

200810110204  読売新聞)


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