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Dogs and Demons :: Керр Алекс
Страница: 56 из 270Many other types of speculative assets also evaporated. Golf-club memberships, which during their heyday could cost $1 million or more, today sell for 10 percent or less of their Bubble price, and bankruptcy looms over many golf-club developers, who must return tens of billions of dollars taken in as refundable deposits from members.
Despite the best efforts of Madame Nui's bankers and the toad, her empire crumbled. In August 1991 the police arrested her, and investigators found that she had based her first borrowings on fraudulent deposit vouchers forged by friendly bank managers. Nui's bankruptcy resulted in losses to lenders of almost ¥270 billion, the resignation of the chairman of the Industrial Bank of Japan, and the collapse of two banks. The «Bubble Lady,» as the press called her, spent years in jail, along with her bank-manager patrons.
Banks, which lent heavily to speculators like Madame Nui to buy stock and land, found themselves saddled with an enormous weight of nonperforming loans. For years the Ministry of Finance claimed that bad loans amounted to ¥35 trillion, only grudgingly admitting, in 1999, that they surpass ¥77 trillion. Even so, most analysts believe the figure is much higher-perhaps twice that. Taking the more conservative figure favored by many analysts, ¥120 trillion, Japan's bank fiasco dwarfs the savings-and-loan crisis of the 1980s in the United States. The S amp;L bailout, at $160 billion, came to about 2.7 percent of GNP at the time, but the cost of rescuing Japan's banks could reach as much as 23 percent of GNP, a crushing burden. By the end of the century, despite a decade of rock-bottom interest rates maintained by the government to support banks, and despite a massive ¥7.45 trillion bailout in 1999, Japan's financial institutions had written off only a fraction – perhaps 20 percent – of the loan overhang.
What were the policies that caused a supposedly mature financial market to fall prey to a mania completely askew with economic realities? The answer is simple. It applies not only to this question of finance but to questions in almost every area in which Japan is presently suffering: Japan's financial system rests on bureaucratic fiat, not on something that has intrinsic value. What occurred in Japan is an elegant test case, better even than that of the U.S.S.R., of what happens when controlled markets defy reality. For fifty years, the Ministry of Finance (MOF), the most powerful of Japan's government agencies, has set levels for stocks, bonds, and interest rates that nobody has dared to disobey.
Despite the best efforts of Madame Nui's bankers and the toad, her empire crumbled. In August 1991 the police arrested her, and investigators found that she had based her first borrowings on fraudulent deposit vouchers forged by friendly bank managers. Nui's bankruptcy resulted in losses to lenders of almost ¥270 billion, the resignation of the chairman of the Industrial Bank of Japan, and the collapse of two banks. The «Bubble Lady,» as the press called her, spent years in jail, along with her bank-manager patrons.
Banks, which lent heavily to speculators like Madame Nui to buy stock and land, found themselves saddled with an enormous weight of nonperforming loans. For years the Ministry of Finance claimed that bad loans amounted to ¥35 trillion, only grudgingly admitting, in 1999, that they surpass ¥77 trillion. Even so, most analysts believe the figure is much higher-perhaps twice that. Taking the more conservative figure favored by many analysts, ¥120 trillion, Japan's bank fiasco dwarfs the savings-and-loan crisis of the 1980s in the United States. The S amp;L bailout, at $160 billion, came to about 2.7 percent of GNP at the time, but the cost of rescuing Japan's banks could reach as much as 23 percent of GNP, a crushing burden. By the end of the century, despite a decade of rock-bottom interest rates maintained by the government to support banks, and despite a massive ¥7.45 trillion bailout in 1999, Japan's financial institutions had written off only a fraction – perhaps 20 percent – of the loan overhang.
What were the policies that caused a supposedly mature financial market to fall prey to a mania completely askew with economic realities? The answer is simple. It applies not only to this question of finance but to questions in almost every area in which Japan is presently suffering: Japan's financial system rests on bureaucratic fiat, not on something that has intrinsic value. What occurred in Japan is an elegant test case, better even than that of the U.S.S.R., of what happens when controlled markets defy reality. For fifty years, the Ministry of Finance (MOF), the most powerful of Japan's government agencies, has set levels for stocks, bonds, and interest rates that nobody has dared to disobey.