Yanagisawa-san, how good to be back. Heat wave or no, I caught the first flight I could when word came of that weird, upsetting speech you delivered at the Foreign Correspondents' Club a few days ago. I knew the bumpy times couldn't be far off.
I mean, there you were: It's two days before the Group of Eight summit in Genoa, 10 days before national elections in Japan, and Hakuo Yanagisawa, minister of financial services and a man pegged as a reformist savior just a few years ago, is telling a roomful of reporters that "presently we don't have a financial crisis in the offing." We can let the banks dispose of bad debts out of operating profit, you say, and reports to the contrary -- the many reports to the contrary -- are "extreme and exaggerated." Then comes the number everyone is waiting for -- right at the end, as if you have to choke it out. What's the value of the non-performing loans in the banking system, someone asks from the back of the room. "NPLs held by the 15 major banks are in the amount of ?18 trillion (US$146 billion)," you reply sanguinely. End of luncheon.
And you find "the mistrusting factor" in the media frustrating? You find it "difficult to accept" that there are doubts in the market? My dear Yanagisawa, you ought to gauge the level of doubt in Washington these days.
Anyway, doubts in the market is putting it mildly. Banking stocks led the Nikkei 225 to its lowest level since January 1985 after you spoke. That's 16 years ago, Yanagisawa-san -- before the Plaza Accord, before the bubble, and all the rest of it. As to the bounce afterward, on the expectation that a 22 percent drop in bank stocks this year would force you to take the debt problem seriously, people see what they want to see, don't they? And they don't hear what they don't want to hear.
For my money, you are right about the doubters now: There shouldn't be any. Read properly, your speech amounts to a statement of government policy. If there is no crisis, it follows that there is no drastic action to take. For all the talk of a new bank plan, neither Prime Minister Junichiro Koizumi nor any of his ministers is likely to have anything new to say after the July 29 elections -- only a new way of saying the same thing, perhaps.
Being a graduate of the Tokyo Law faculty, you were careful to put out a number that was technically correct. You counted the very worst of the very worst of the loans extended by the 15 largest commercial banks. And you were right: There's ?18 trillion of them. It's also true that the first few steps up Everest are no more difficult than walking to the corner market.
Forgive me for saying so, Yanagisawa-san, but in the circumstances your presentation seems grossly irresponsible. Bad debt numbers bounce around this town like pachinko balls; everyone's got a set of them. But yours is surely among the most meaningless.
And so we must enter briefly upon the business of counting.
There are many people here who are clever with a calculator -- the doubters, you call them -- and altogether they paint an interesting picture.
Remember back in April, when the opposition Democratic Party forced the Financial Services Agency to admit that the true count of troubled loans came to ?151 trillion? Of course you do, since your speech was, among other things, a veiled political attack on the Democrats. Anyway, the core of the issue is what you count, as the Democrats made clear. And that's where almost everyone differs from you.
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