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Critics Say Koizumi's Economic Medicine Is a Weak Tea, February 27, 2002
"'It is Japan's old story of no accountability' ... 'Koizumi himself has joined the conservative, anti-reform group.'"
" ... the package ... print more money, press banks to straighten out their bad loan portfolios, ... scrutinize banks more closely and urge the government's bad loan buying agency to speed up loan purchases. To buoy Japan's battered stock markets, the package calls for tightening controls on short selling and holds out the possibility of an injection of taxpayer money into insolvent private banks."
"Market analysts said they had hoped for bolder measures — tax cuts to revive consumer spending, vigorous deregulation, and cutting off credits to bankrupt companies. 'This policy package is reactionary, not aimed at addressing real fundamental underlying issues,' a high-level Bank of Japan official said ... "
"Japan has been in and out of recessions for the last decade. For three years, prices have been dropping, first because of increased efficiency and cheaper imports, but more recently because incomes have receded to 1995 levels. ... Sales by Japan's wholesalers and retailers combined dropped 5.4 percent in January from a year before, representing the 12th consecutive monthly decline ... Despite recent major increases in the money supply, he said, the money stays in banks because companies are cutting debt and consumers are reluctant to spend. ... Japan's overcapacity ... is the cause of deflation ... 'Reducing supply means closing factories' ... "
"'As fear of a February and March crisis emerged, Koizumi chickened out' ... Government officials have vowed this week to keep the Nikkei 225 index of the Tokyo Stock Exchange around 10,000 ... United States Treasury Secretary ... warned ... : 'Where they are is not sustainable for too much longer a period of time. Something will give.'" ... [more]
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