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1998-05-11 17:21:13


Japan's Housewives Have Begun the Bank Run



It has begun. On April 1, the Japanese banking industry was deregulated. Some banks had been paying depositors -- meaning housewives -- as little as two-tenths of one percent per annum. American banks are now offering 20 times that or more.

Funny thing: the oriental mind isn't so inscrutible after all. The women have begun the shift to U.S. and foreign banks.

Japanese banks are still heavily invested in overpriced, illiquid real estate and stocks bought far, far above the 20,000 Nikkei average. Today it's below 20,000.

Japanese banks will collapse in 1999. They will not become y2k compliant. The largest dominoes on earth have begun to wobble.

Notice the oddity about the story: reverse ATM's in Japan. They take in cash.

This is from the SYDNEY MORNING HERALD (May 9).

* * * * * * *

SHE was slender, middle aged and impeccably turned out in a Fendi suit and matching shoulder bag. She had with her a dark blue briefcase full of freshly printed 10,000 yen notes.

As I watched she fed the entire contents of the case, bundle by crisp bundle, into the ATM machine outside Tokyo's Otemachi business district. After each press of the deposit button, there was a furious whirr and the machine would open and ask for more.

This went on for some 20 minutes. She may have paid in $2 million dollars, or even $5 million that afternoon. It is hard to count a briefcase full of money while standing metres away in a queue of impatient Japanese.

But one thing is certain, the woman was one of tens of thousands of jittery deposit holders who are frantically switching their personal savings - variously estimated at around $170,000 a household - from the nation's suspect Japanese banks into foreign banks, such as Citibank.

In one year individual accounts at Citibank have jumped 50 per cent to 850,000 and it is receiving 450,000 inquiries a month about new accounts.

The bank refuses to say what its deposits are, but it confirms that savings deposits jumped 38 per cent last year.

Suddenly the unthinkable in Japan has become the reality. The enigma that was Japan has now given way to a chaotic reality.

The rush to transfer life savings out of Japan's debt-laden banks - at last count they had some 77 trillion yen ($905 billion) in outstanding bad loans - is part of deeper radical change taking place in almost every sphere of Japanese society.

Japan's deepening recession - the first in a quarter of a century - has shattered all the cosy and largely unquestioned assumptions upon which postwar Japan was able to build an economy that cornered some 13 per cent of global GDP.

Five years ago, it would have been unthinkable in Japan for deposit holders to pull their money out of any Japanese bank, post office savings, credit union or agricultural co-op accounts.

The banks and financial institutions were the backbone of the postwar miracle economy. . . .

In what would have been a politically suicidal statement even a year ago, Mr Kato predicted more Japanese financial institutions would close their doors, merge or go bankrupt.

He said said the collapse of the Hokkaido Takushoku Bank, one of the nation's top 20 banks, and Yamaichi Securities, one of the four largest brokerages, late last year showed the convoy system was finished.

"The end of the convoy system means that any decision on survival will basically be in the hands of the market," he said. . . .

The influential standing of Japan's two greatest institutions, the Bank of Japan (BoJ) and the Ministry of Finance (MoF) is badly dented. Last weekend a BoJ official who led an investigation into widespread corruption at the bank committed suicide.

Takayuki Kamoshida, an executive director, left a note which read: "I'm too exhausted. I've reached my limit."

It was the seventh suicide in the bureaucracy in as many weeks.

A total of 98 bank officials, including five top executives, have been charged with accepting bribes in the form of excessive wining and dining from commercial banks. . . .

Giant corporations like Mitsui, Matsushita and Toyota have all announced that they are doing away with the traditional employment system based on seniority and lifetime employment for one based on merit.

More than half the major companies polled in a recent Labour Department survey said they were switching to a merit-based system. Only 3.8 per cent said they would stick with the old system. Apart from the recession, restructuring is also pushing Japan's unemployment rate to a post-war record of 3.9 per cent.

As pessimism mounts - more than 72 per cent of Japanese surveyed by the Prime Minister's Office believe Japan is heading towards a bleak future because of the recession - the demand for change is growing in and outside the country.


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