Japan insulated from Wall Street Crisis

September 22, 2008

Nytimes article to that effect.  I don't feel that safe though.

<blockquote><p>Part of the reason is that Japan has already suffered its agonizing crisis. The 1980s bubble economy collapsed in the 1990s because banks were burdened with real estate-related bad loans, not unlike those that Washington is moving to have the American government take over from banks. </p><p>In Japan, it took a "lost decade" to work through those debts. The Japanese became very cautious after the bitter experience of the cleanup. One result was that they seem to have largely avoided the risky subprime loans that set off the current crisis. According to the International Monetary Fund, subprime-related losses at Japanese financial companies have totaled just $8 billion, out of global subprime-related losses that some say could total $1 trillion.</p></blockquote><p>And we love to save money in banks with almost no interest rates.</p><blockquote><p>The country sits on a $14 trillion pile of household savings, the product of decades of trade surpluses and frugal lifestyles. This has allowed Japan to finance its immense $8.1 trillion fiscal deficit and still have enough money left over to be the world's largest creditor nation for the last 17 years. </p><p>Last year, the nation's net overseas assets – the sum of all Japanese investments abroad, minus what foreigners hold in Japan – reached a record 250 trillion yen, or $2.4 trillion. </p><p>That means that Japan's domestic economy has been largely insulated from global credit market turmoil because it does not borrow from those markets. At the same time, with so much money flowing out – usually into safer investments like Treasuries – stability in the United States clearly matters.
</p></blockquote><p>None of this makes me feel any better about the crisis.  But, the first sentence below reminds me of what it's like working in the web industry in this country.
</p><blockquote><p>Still, its relative detachment makes Japan an oddity in a world where globalization has seemed inevitable. Countries in Europe have also tried to find ways to be part of the global economy while staying apart from it, but to no avail. Other nations, like China, have bet their future on becoming enmeshed in it.</p></blockquote>

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