Michael
May 21st 2009, 07:45 PM
This is a very interesting article that discusses the two different banking crises that have occurred in Japan and Korea in the recent past. It is very interesting the way structural or cultural characteristics seem to be very influential in producing policy outcomes - illustrated in the way similar events in different countries produce entirely different results.
What I want to do here is give a stylised version of Japanese and Korean economic history and how it pertains to the banking crisis both countries had.
Source (http://brontecapital.blogspot.com/2009/05/tale-of-two-banking-crises-japan-and.html)
What is most strikingly different between the two is the domestic savings issue - savings are strong in Japan and comparatively weak in Korea. This produces a whole host of differences in the banking culture of the two nations - and of course, the economies that rely upon their respective banking/finance sectors for investment funding. And most of all, it produces two different approaches to the issue of a banking crisis.
Of course, one can't help but to read something like this and look for clues as to how the US situation is going to play out since the banking crisis in the US has more than a bit in common with the ones that hit Japan and Korea a few years back. Though of course, the US economy is more diverse than any other economy and thus has more domestic resiliance than most other national economies, but still, that negative US savings rate seems to put the US situation into the Korean model, but the US Treasury department strategy seems to be pushing towards the Japan model.
One piece of information in the article I found that is particularly interesting is confirmation of some information I've stumbled upon elsewhere recently, that the biggest economic drag in Japan over the last ten years has been the corporate sector, not the banking sector.
The one thing that does seem a bit odd to me is that 'medium-term' inflation problem in the US does look real, but there is little evidence of this occuring in Korea and/or Japan (though, in the case of Japan, they didn't crank up the printing presses quite as much as US has - they just did the sovereign debt thing that the US is also doing).
Any thoughts on this - or where the US is heading right now?
What I want to do here is give a stylised version of Japanese and Korean economic history and how it pertains to the banking crisis both countries had.
Source (http://brontecapital.blogspot.com/2009/05/tale-of-two-banking-crises-japan-and.html)
What is most strikingly different between the two is the domestic savings issue - savings are strong in Japan and comparatively weak in Korea. This produces a whole host of differences in the banking culture of the two nations - and of course, the economies that rely upon their respective banking/finance sectors for investment funding. And most of all, it produces two different approaches to the issue of a banking crisis.
Of course, one can't help but to read something like this and look for clues as to how the US situation is going to play out since the banking crisis in the US has more than a bit in common with the ones that hit Japan and Korea a few years back. Though of course, the US economy is more diverse than any other economy and thus has more domestic resiliance than most other national economies, but still, that negative US savings rate seems to put the US situation into the Korean model, but the US Treasury department strategy seems to be pushing towards the Japan model.
One piece of information in the article I found that is particularly interesting is confirmation of some information I've stumbled upon elsewhere recently, that the biggest economic drag in Japan over the last ten years has been the corporate sector, not the banking sector.
The one thing that does seem a bit odd to me is that 'medium-term' inflation problem in the US does look real, but there is little evidence of this occuring in Korea and/or Japan (though, in the case of Japan, they didn't crank up the printing presses quite as much as US has - they just did the sovereign debt thing that the US is also doing).
Any thoughts on this - or where the US is heading right now?