February 26, 2002
Japanese banks get ready to bail out real estate companies
Continued incestuous relationships between Japan's elite banks and the massive construction industry are just one example that Japan has not yet bitten the bullet on reforming an economy nurtured on priviledge. Japanese newspapers are reporting today that two leading and debt ridden real estate companies Daikyo and Towa Real Estate Development, are being bailed out by the banks. According to the BBC - "...Last month, custom-made house builder Shokusan Jutaku Sogo asked the courts for protection from its creditors with debts totalling 13.5bn yen. And Aoki Corp, another construction firm, was given debt forgiveness early in 2001, but still went bust in December as demand slackened and its debts piled up. But that is only the tip of the iceberg. Construction firms took advantage of the massive property price boom of the 1980s, borrowing astronomical sums from their lead banks. The close relationship between the firms and their lenders meant risk oversight was minimal..." Japan is living in fairyland if it still expects to recover and not make massive structural changes to it's economy. The job is increasingly looking too big for Koizumi and the reigning LDP. |
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