Japan won't chip in, so Japanese banks soar
Consequently, Guambat is positively gobsmacked at the audacity of the Japanese banks to not touch the subprime fix-up schemes, not even with a 10 foot pole.
Just how bad is this credit crunch anyway? What do they know that the rest of us don't.
This is the slightly old news set-up:
Japanese Stocks Fall, Led by Banks on U.S. Credit-Line Request
Japanese stocks fell, led by Mitsubishi UFJ Financial Group Inc., after Nomura Holdings Inc. said the country's three largest lenders were being asked to contribute too much to a subprime-asset bailout fund.
Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. paced the drop after the Nikkei newspaper said they will have to reply this week to a request by U.S. banks that the banks each provide a $5 billion credit line for the fund.
So, that was yesterday. But yesterday's gone. Today, there's this from Reuters:
"Bank shares such as Mitsubishi UFJ Financial Group were flooded with buy orders after reports that they plan to reject a request to help finance a U.S.-led subprime rescue fund." (Reporting by Taiga Uranaka)
Also see this Reuters report.
MarketWatch offers this explanation, which borders on apology:
The Japanese financial world underwent its own real-estate-centered crisis after the property bubble burst in 1989. Japan's banks were unable to raise funds in the short-term money markets and were forced to cut lending to corporate clients.Guambat reckons that there are some Japanese bankers who still blame Wall Street bankers for their off-balance sheet tricks which they sold to Japan and that helped sink their economy in the 1990's. Nevertheless, this is pretty rough. Japanese bankers aren't the only ones with memories.
Japanese companies weren't able to borrow from banks or raise funds in the capital markets, and the economy entered what is now known as "The Lost Decade" of stop-and-go sluggish growth and contraction, until a banking-sector cleanup began in earnest in 2002.
Is a worldwide credit war looming?
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