Check out this Japanese website:

http://www.yomiuri.co.jp/index-e.htm

Is this news? Is my math right?

-- Puddintame (achillesg@hotmail.com), May 17, 1999

Answers

Or is that $35 billion!

-- Puddintame (achillesg@hotmail.com), May 17, 1999.

That's 3.5 Trillion yen from bankrupt (or nearly bankrupt) borrowers. Is it 350 billion USD?

-- Lisa (lisa@work.now), May 17, 1999.

Puddintame,

The current exchange rate is 123 yen per dollar. So just divide 3.5 trillion by 123 and you've got it. Don't have a calculator that handles that many zeros, so I'll leave it to some math wiz to figure it out. Whatever, I think we've been told for quite some time that Japanese banks are sitting on Huge bad assets.

-- Gordon (gpconnolly@aol.com), May 17, 1999.

If your rate is used, comes out to $28.5 Billion.

"...pretty soon you're talking about real money."

-- Mac (sneak@lurk.hid), May 17, 1999.

Technically, the bad loans were always there, We're just getting to learn more about how much (what I call the 50% rule).

Banks loaned 3.5 trillion yen (US$27 billion) to borrowers already bankrupt or essentially insolvent. Throwing good money after bad in a futile attempt to hide the financial mismanagement by banks and companies.

You still don't get the full picture of bad loans... The Japanese banks have subsidiaries called 'nonbanks' (clever name, huh?) that they used to loan (and hide) more money thrown down the rathole.

Consumer loan sharks, I mean finance companies, are lending massive amounts to consumers now. No one ever recovers from the cycle of borrowing from them.

American singer Whitney Houston has become a paid 'spokesperson' for one loan shark, I mean finance company, enticing Japanese men to borrow by heaving her breasts at them and telling them to "Make it happen..." Thanks Whitney.

-- PNG (png@gol.com), May 17, 1999.

The last I knew, the estimated total bad loan figure for the Japanese banking system, including off-the-book loans to the Mob and govt. officials, was in the neighborhood of $2 trillion U.S. So another $28.5 billion U.S., or whatever, is really small potatoes. Also remember that some of Japan's largest banks are already technically insolvent, propped up only by the Japanese govt.

But hey, the good news is that Japanese banks have Y2K licked. So say Japanese officials now, in response to foreign criticism. Forget that Japanese FSA report of just a few months ago that said some of Japan's biggest banks were in enormous Y2K trouble. It was a mistake. Apparently the Japanese govt.'s own watchdog agency (FSA) needs watching itself, huh?

So, depositors and foreign investors, take heart. And Whitney, your check is in the mail.

-- Don Florence (dflorence@zianet.com), May 17, 1999.

(1) What's a few trillion yen among friends?

(2) Any definition of "troubled loans" that includes bankrupt borrowers is sadly missing out on the point. These are not troubled loans. They are (at least partially) loans that should be written off. Period. The banks may get a small precentage, but they need to face the reality of the problem. Many (if not all) Japanese banks have been unwilling to face their loan problems squarely.

(3) The real question is, what will be the impact? Will this cause additional bank failures? Will there be runs on the Japanese banks (many of the world's largest banks...)? And furthermore, what will happen if they somehow manage to be still shaky come the fall, when consumers and solvent businesses will be withdrawing cash for the holidays and for contingencies?

-- Mad Monk (madmonk@hawaiian.net), May 17, 1999.