While
London and Wall Street seems to be imploding in the current financial crisis,
Japan looks to have been left relatively unscathed.
Japan
has often been thought of as a somewhat isolated economy, sometimes being a
negative characteristic for the world’s second largest economy, but the stark difference
between the nation and the western world has never been more obvious than in
this current financial storm, probably the worst since the Great Depression of
the 30’s.
It seems like business as usual for Japan’s
banking titans, who are looking on with a disconnected impassioned view while
huge banking conglomerates in the United States and Europe teeter on the brink
of destruction.
The looming credit crunch has not hit Japan
yet, and possibly won’t at all with the country’s issue usually being the banks
possessing too much cash rather than too little. The Bank of Japan, the
county’s central bank, is unlikely to be mimicking the Federal Reserve with its
huge bailouts of top institutions.
Indeed, the latest economic catastrophe is
barely even making the news in Japan. There are far more pressing events taking
up airtime than “Lehman Shock”, as it’s known here, such as a tainted rice
scandal and an incoming typhoon weather system.
In Japanese political circles, where there
is a race for a new PM coming up, the financial crisis is not high on the list
of talking points.
This is not to say that Tokyo will be
completely unaffected by the current troubles, far from it. The country will no
doubt be threatened, at least, by a coming economic depression considering the
nation is heavily reliant on its exports. Its stock market has also fluctuated
and dropped this week.
However, Japan has so far escaped the turmoil
that has gripped the rest of the world’s markets.
“The global downturn is viewed by the
Japanese as an earthquake in a distant land, with only a ripple effect being
felt here,” says Michael Lane, Global Co-Head of the Investment Management
Division at Shizuoka Capital Wealth Management who manages over $5 billion of
funds in the region.
“I’m not feeling the distress and anguish
here that I observe happening over in the States or Europe,” Lane added.
Japan’s avoidance of the problems
afflicting the rest of the world might be due to their wise handling of their
debt in the 90’s. They seem to have lessened the build-up of subprime loans; a very risky key
factor that most analysts agree has ignited the current crisis.
