The NYT is good to look at the similarities between Japan’s crippling decade-long economic crisis and the one we’re now more than a year into.
But something important gets lost in translation: How much the yen is worth.
The charts that accompanies the story on the front of Business Day lists Japanese bank loan losses over fifteen years in trillions of yen. The story does the same with no mention that it takes about 92 yen (today) to make a dollar.
So the 96-trillion-yen loss from 1992 to 2005 is roughly equivalent to $1 trillion at current exchange rates. Readers shouldn’t have to to look up exchange rates or do back-of-the-napkin calculations to get a relevant reference point.
Aside from that criticism, it’s a worthy story.
“I think they know how big it is, but they don’t want to say how big it is. It’s so big they can’t acknowledge it,” said John H. Makin, an economist at the American Enterprise Institute, referring to administration officials. “The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks.”
Instead, the Japanese first tried many of the same remedies that the Bush administration tried and the Obama administration is trying — ultra-low interest rates, fiscal stimulus and ineffective cash infusions, among other things. The Japanese even tried to tap private capital to buy some of the bad assets from banks, as Mr. Geithner proposed.
Uh huh. As I’ve suspected.
Again, go read Martin Wolf’s column from earlier this week.