Category Archives: Japan

Housing Bubble and Inflation: What About the Carry Trade?

OK, that isn’t what Wolfgang Munchau said in his Financial Times article today. His piece, “The princess’s cake gets an added crunch,” starts with the theory that inflation and our asset bubbles were ultimately monetary phenomena. While the rest of Munchau’s piece, which focuses on why we should be worried about inflation, is useful, I […]

Some Japanese Banks Reluctant to Lend to Foreign Banks

As the Financial Times points out today, we are witnessing a replay of the pattern seen during Japan’s credit bust, except in reverse. Western banks were leery of extending credit to the Japanese and charged a premium over normal interbank rates. Now that the Japanese credit markets are more liquid than many others, foreign bank […]

Lessons from Japan Versus Wishful US Prescriptions (Summers/De Long Edition)

Two articles in the Financial Times, one a discussion of the implications of Japan’s crash for US policy, the other the latest in a series of comments on the credit crisis by Larry Summers, take different views of the best remedies for our economic woes. Unfortunately, the Japanese prescription seems likely to be necessary, yet […]

Japan Says US Financial Crisis Worse Than Its Bust, Urges Government to Recapitalize Banks

The comments in the Financial Times by Yoshimi Watanabe, Japan’s financial services minister, are extraordinary. He ventured to give the US advice on its credit crunch based on Japan’s experience during its post-bubble-years banking crisis. And it’s not pretty. Why are these remarks so unusual? Consider: Most countries don’t give other countries advice on how […]

Dollar, Asian Stocks Tank on Carlyle Capital Collapse, Credit Market Worries

Asian markets opened lower, then took a nosedive after the release of a report that troubled mortgage bond hedge fund to Carlyle Capital failed to reach a standstill with creditors (hat tip reader cb). The Nikkei fell 3.5% to 12,400. The dollar dropped to 100 to the yen. I bought yen at around 111 in […]

Is the US Following in Japan’s Footsteps?

Many observers have noted that the US is unwilling to take its medicine. In the Asian financial markets crisis of 1997, nations with large current account deficits and domestic asset bubbles saw their prosperity unravel as asset prices collapsed, leading to borrowers defaults, a contraction of credit which spiraled into a crunch, and withdrawal of […]

Is Japan Starting to Suffer a Subprime-Induced Credit Crunch?

Today’s Telegraph has a good piece, “Japan is the next sub-prime flashpoint,” by Ambrose Evans-Pritchard. And before I get to the piece, I want to say a few things about the author. A number of readers detest Evans-Pritchard, and I am at a loss to understand why. He wears his biggest fault on his sleeve, […]