Japan says U.S. banks may need bailout

[flashl]

TOKYO — The Bank of Japan said on Tuesday Washington may have to use public funds to bail out U.S. banks hit by the credit crisis as Tokyo joined European calls for the Group of Seven states to work together calm financial markets.

The collapse of a mortgage bubble has so starved some U.S. banks of capital that the government may have to step in if private investment does not work, said Masaaki Shirakawa, deputy governor and acting head of the central bank said before a G7 meeting this week.

“First of all, it should be efforts by the private sector. But if the efforts by the private sector are not enough, a public capital fund injection, among various options, may become necessary,” Mr. Shirakawa, the government nominee to head the BOJ, told a parliamentary hearing considering his candidacy.

European finance officials have been stepping up calls for G7 nations to act together to protect the global economy and prevent another credit crisis from infecting markets.

...

“Using Japan's experience, I would like to give advice on what should be done for stability in the global economy as a person from the country that had already gone through this problem before,” Mr. Shirakawa told parliament.

Report On Business

[cliss]

1. Isn't that cute?

First they should use private funds. If that is not enough, "a public capital fund injection" should be used.

What does he think they are doing?????

[Art_from_Ark]

2. Another strategy that was used in Japan

was that they only paid 0.0000001% interest on savings accounts to help finance the bailout (and, to add insult to injury, they taxed the already ridiculously low interest at 20% off the top). What really helped to pull their rear ends out of the fire, though, was the fact that the Japanese are natural savers, and there are few places in Japan where people can safely park their life savings, so inertia kept all those trillions of yen available in the banks and postal savings accounts instead of searching for a better return elsewhere.