Alan Greenspan thinks that the Japanese banks may not be on the verge of collapse any longer, he hopes. Things may be getting better there, he hopes.
Now look forward to the summer of 1999.
We may have to have more and larger Asian bank rescues by the West, he said. The last one (November) was $40 billion. The U.S. put up $10 billion. Congress did not get to vote on this. Oh, well.
Question: If Japan's banks start going down, what organization in the West will have sufficient credit to lend to Japan? The Japanese are the West's creditors.
This is from USA TODAY (Dec. 3). The link was replaced, however.
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Federal Reserve Chairman Alan Greenspan voiced doubts Tuesday about the stability of Japan's fragile banking system, but said Tokyo seems to be finally moving to fix it. . . .
"In most developed nations, banking systems appear reasonably solid. Japan has been somewhat of an exception, but there have been some positive signs there as well," he said.
Analysts say the health of the world economy depends on a stable banking system in Japan. A sudden run on Japanese banks by depositors fearful of losing their money would send shock waves through the international financial system, hurting U.S. banks and the U.S. economy. . . .
In many ways, the financial dangers confronting Japan are not unlike those that faced the USA in the 1930s' Depression, when thousands of American banks went belly up and their customers lost millions of dollars because there was no government-guaranteed system backing their deposits. . . .
Greenspan defended international rescues of troubled economies, such as those in Asia, and said future rescues may have to be even bigger.