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BOJ: Economic recovery may be delayed slightly

October 8, 2008
By Ken Worsley


Just yesterday, Bank of Japan Governor Masaaki Shirakawa told a news conference:

The timing of the [economic] recovery may be delayed slightly compared with our initial expectations…Downside risks have been rising and warrant attention.

And then the Nikkei fell 952 points today. And then it was announced that corporate bankruptcies were up 15% in the April-September quarter, with liabilities nearly tripling. And the Index of Business Conditions was down. And other bad news followed.

“Delayed slightly”? After all the trouble the LDP went through to put Shirakawa in his position, he really should be saying better things than this. Then again, he’s skeptical about the global rate cut (it’s good that someone is), and his colleague, Finance (and Financial Services) Minister Shoichi Nakagawa, is brushing off the idea that Japan should raise its insurance limits for bank deposits. This is a fine and defensible position, but his justification is that Japan’s banking system is “healthy” enough to make such a move unnecessary (it’s actually not).

Yesterday, Nakagawa told reporters, “If we ever lift [insurance limits] in this situation, that would rather raise concerns or a sense of uncertainty among Japanese people”

Wouldn’t want to make people worry now, would we?

Filed Under Bank of Japan, Finance 

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Comments

9 Responses to “BOJ: Economic recovery may be delayed slightly”

  1. Matt Dioguardi on October 9th, 2008 8:19 am

    According to this article, they will hurry up and have elections in Japan. Then after having elections, they’ll move to use Japanese taxpayer money to bailout American banks:
    http://search.japantimes.co.jp/rss/nb20081009a2.html

    Wish them luck with that.

  2. Ken Worsley on October 9th, 2008 10:08 am

    Thanks Matt.

    What would be left to bail out thier own banks when the time comes?

  3. A.S. on October 10th, 2008 4:47 pm

    Clueless…now Yamato has gone under and these guys don’t know what to do or say. Could they be more out of touch than US leadership?

  4. Matt on October 10th, 2008 9:39 pm

    “his justification is that Japan’s banking system is “healthy” enough to make such a move unnecessary (it’s actually not).”

    This sounds like Bernanke and Paulson throughout 2007 and 2008. Nakagawa should look across the pacific to see how quickly things can spiral out of control. Making policy based on what one sees in the rear-view mirror can be devastating.

  5. WG on October 10th, 2008 9:48 pm

    Didn’t the Yamato go down over 60 years ago?

  6. Paul's son on October 10th, 2008 10:54 pm

    So when is Japan going to outlaw short selling? It’s troubling that they have not yet at least pushed the idea that shorting is unpatriotic. Regulators need to get on the ball here.

  7. Ken Worsley on October 11th, 2008 12:23 am

    WG,

    The Yamato was sunk in April 1945.

    Paul’s son,

    I hope you’re taking the piss. It’s hard to tell these days.

  8. Jeremy on October 15th, 2008 8:04 pm

    recovery is 20 years behind

  9. RR on October 16th, 2008 9:19 am

    Nikkei down nearly 800 points right after opening. The volatility is bad.

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