Economic Collapse and the Apocalypse
Part I - The Great Illusion
With the recent rise of the Nikkei to the 17,000 area and record breaking levels from the Dow, it would appear to most that Asia's financial problems are under control. In their greedy search for gain, people are under the spell of an illusion - not able to see what is really happening. They fail to see that financial collapse relentlessly gathers steam on a hourly basis.
There are now two things that will trigger the collapse of Japan: Financial deregulation of the country, or the devaluation of the yuan
A credit crunch of alarming proportions is developing in Japan. Nomura Research Institute's chief economist, Richard Koo, recently said that Japanese financial institutions tried to call-in loans of 30 trillion yen, equivalent to 6% of the Japanese economy. Interest rates have increased - some higher-risk borrowers being asked to pay between 18 and 20 per cent for funds. Additionally, the inter-bank loan market has dried up, causing great liquidity problems for financial institutions. Depositors are moving funds from smaller Japanese banks to foreign banks (Citibank in Tokyo recently ran out of account numbers due to the heavy influx of new customers), and to the larger Nippon banks, or the gigantic Postal Savings System.
Come April 1,1998 Japan's financial system is to be deregulated. This will free-up regulated deposits totaling an equivalent of about U.S.$2 trillion. These funds are sitting idle in insolvent financial institutions. Depositors are receiving a miserly interest of 0.50% per annum. It is widely feared by financial experts that if these funds abandoned these banks, they will collapse. Consequently, some are calling for a delay in financial deregulation. Mr. Yoh Kurosawa, Chairman of the Industrial Bank of Japan, recently said: "It is impossible that all 148 banks would survive. I think that less than 10 banks can survive international competition."...