Zombie banks

After the EFSF bailed out couple of countries including Greece, they decided to find and use a long term strategies in order to enhance liquidity in the EU banking system and there are couple of those rescue solutions:

Today in Japan, a reinvention is necessary. There are many struggles with the young generation, the old generation, and catastrophic events which should be addressed. Specifically, the Japanese economy has been experiencing deflation for the past twenty years. In an article, the results of the deflation were described. The authors said, “Because of fewer available jobs and lower

The growth advanced Japan to rank as the 2nd largest economy in the world rivaling the United States. However, this economic growth started slowing in the 1970s and in 1990 real estate and stock prices crashed and “the bubble burst” (Drogus and Orvis 240). Luckily, the government managed to get the economy back up and running in 2003 when Prime Minister Junichiro Koizumi reduced regulation, privatized the postal service saving system, and lowered deficit spending.

The shadow banking system can be approximately defined as “the system of credit intermediation that includes objects and activities outside the regular banking system”. Its form is correlated to the way in which the banking sector and the

Economists describe the global crisis of 2008 as the worst financial crisis since the Great Depression. National banks assisted in bailouts to prevent large financial institutions from collapsing, and that was only prevented by the help of national banks, who assisted in bailouts. Although national banks stepped in, stock markets dropped all over the world. The crisis is the cause for the failure of many businesses and a loss of trillions of U.S. dollars in consumer wealth, along with decreased economic activity and the nation-wide debt crisis over in Europe. There were many countries affected by the global financial crisis, one in particular being Greece. Many people think the problems in Greece started with the financial crisis, but the country’s debt problems started long before the crisis, tracing back to the 1970s. The Greek economy was not prepared to deal with the economic downturn, because of its large gap between revenue and expenditures.

“What kept Japan down were repeated macroeconomic policy mistakes” (The New York times, 2008). In fact, the Japanese government’s action was not effective regarding the situation of their economy. The use of monetary policy did not only worsen the effect of the liquidity trap but also create a deflationary pressure. On the other hand, their slow cuts in Bank of Japan nominal interest rate and deflation lead to nominal and real interest rate of different levels. Even nominal interest rate at zero, real interest rate has been positive. Fiscal policy was inadequate to increase demand and output but led to deficits and accumulating government debt.

Although a commonly accepted view is that the hidden budget deficit in Greece is the beginning of the European sovereign debt crisis, the real causes of this economic crisis can be various. To reveal the whole event, a comprehensive review of the background is

Japan saw its nation change in 1990 when the Japanese economy stagnated. Indeed, between 1991 and 2003 the Japanese economy only grew 1.14% (of GDP) every year. This is not enough when compared to other developed countries. (Yuji Horioka, 2006). Alexander, A. J. (2000) states the facts that from the first quarter of 1990 to the first quarter of 2000 the annual increase in real gross domestic product per capita barely exceeded 1 percent, making it very clear that Japan was in a recession. This is all the

On 10th May 2010, the European Central Bank (ECB) launched its Securities Market Program, which allowed it to buy government bonds of ailing economies like Greece on the secondary market in order to boost investor confidence and also to prevent further penetration of this problem. Eurozone Finance ministers also agreed to implement rescue measures worth 750 billion Euros to keep struggling Eurozone economies afloat.

The economy of Japan over the last few decades has had a series of highs and lows. Japan’s post-war growth, due mostly to extremely successful car and consumer electronics industries, was pretty much over by the 1990s. This, combined with the post-war Japanese baby boom and later on drop in fertility rates has led to a significant macroeconomic impacts. Demographic changes have heavily influenced savings, investment, and inward streaming revenue. Policymakers created key errors while struggling to swing the structure of their balance sheets. Economic growth in Japan has been predicted to reach 1.0% in 2017 before slowing down to 0.8% in 2018. At the moment fiscal consolidation (a policy aimed at reducing government deficits and debt accumulation) has stopped, which should aid Japan in dealing with the impact of the appreciating yen. Though there has been a decline in business investment, private consumption is still adding to economic growth. The real GDP (total value of all final goods and services produced within a country’s borders) of Japan has increased at a 1.6% annualized rate since the start of 2016 also in spite of yen appreciation.

Japan ranks as the third largest economy in the world as of 2010. The GDP at current prices in US dollars in Japan was reported at 5068.06 billion in 2009, according to the International Monetary Fund (IMF). Japan’s resurgence after World War II has however reached an inflection point in yearly 1989 after the burst of Japan’s asset price and real estate bubbles. As can be seen from the graph below, Japan’s GDP has hovered around the same level through more than 20 years of economic stagnation. The GDP’s slow growth has been exacerbated by the world financial crisis of 2008. A major landmark of Japan’s stagnation has been the BOJ’s fight against deflation.

Abstract What is the European debt crisis? As the head of the Bank of England referred to it in October 2011, it is “the most serious financial crisis at least since the 1930s, if not ever.”1 In fact, the European debt crisis is the shorthand term for the region’s struggle to pay the debts it has built up in recent decades. Five of the region’s countries – Greece, Portugal, Ireland, Italy, and Spain – have, to varying degrees, failed to generate enough economic growth to make their ability to pay back bondholders the guarantee it’s intended to be. Although these five were seen as being the countries in immediate danger of a possible default,

Japan enjoyed an Asia’s economic miracle that the world witnessed a country that started out poor and had become the second-largest industrial power during the postwar era. However, a large bubble economy had been irritated by the growth, especially in the stock and asset price markets, the economy suffered a near catastrophic crash caused by speculative mania(Hall and Von Wiesen, 2014). The Japanese economy has stagnated after the collapse of bubble economy. The economic situation has been in a wide deflation. In the last two decades, Japanese government took several measures to solve the deflation problem and spur the economy. There are fiscal expansion, conventional monetary measures, Yen depreciation, bank recapitalisation, Quantitative Easing, and three arrows of Abenomics. But the situation did not change much, the balance sheet of the country shows continuous economic recession.

The adoption of the euro led many EMU countries of different creditworthiness receiving similar, very low interest rates for government bonds and private credits during the years preceding the crisis due to the inherent belief in investors that the euro would induce endogenous economic convergence in the Eurozone. In 2005, ECB President Jean-Claude Trichet claimed that yields on Eurozone sovereign bonds were driven overwhelmingly by “euro-area-wide shocks” and there was only a small effect from

The topic of this dissertation is to discuss the monetary policy adopted in bubble economy period of Japanese. As Japanese economics is a specific example around the world. The Japanese government adopted many effective ways to revitalize the economy with the result that its economy rose abruptly after the World war II. However, because Japan entered a liquidity trap around 1990s, and experienced a “Lost Decade” (Hiyashi and Prescott, 2002), the government experienced many economic problems such as of slow growth, deflation, and continues nethermore output (Daniel, 2009) In this dissertation, the following parts will be given: Literature review, data description, test result discussion and conclusion.