Critique - Japanese Banks: Home and Away

The blog post, “Japanese Banks: Home and Away” touches on several crucial points and thoroughly investigates the way in which the Japanese banks are in trouble and are finding success. The blogger makes good use of economic terms and makes the article easy to read. Additionally, I find the idea of speculation at the end of the article to be a very clever touch and I am inclined to agree with his take on how the crisis would affect the issues facing Japanese banks.
Overall, the issue with the Japanese banks is one that should be enviable by other banks, and the blogger states as much. I think that while this is enviable, the blogger missed a crucial part of the article that stated that past failures in foreign investments and corporations had not gone well for the Japanese in the past. These past failures demonstrate some of the trepidation on the part of investors. With the seeming unwillingness of the Japanese to expand their traditional isolationist policy and incorporate foreigners into the hierarchy of their foreign acquisitions, the issues facing the banks and their stockpiles of money may not be as simple as taking advantage of the tragedy with the tsunami and finding the now needed investors.
Furthermore, while the blogger makes a good point about how there is now greater investment demand (total amount given to the economy by firms and corporations), the source of the loans must be reanalyzed as well. Yes, people will need to rebuild and take out loans in order to survive this tragedy and the banks are very eager to do this; however, the situation has changed drastically for the Japanese. The blogger failed to mention a very important part of investment on the part of the demanders and consumers, confidence. The confidence in the overall structure of Japan is very fragile at the moment and there are great international concerns about the pressures created by the tsunami and its devastation. Consumer confidence is essential to the success of these banks and the loans given out. Without the confidence in the loaners, the loanees might ultimately look in other directions for their loans – directions that have more stability and are less likely to be affected by crises in the near future.
Ultimately, this article and post were very interesting and provide much to the think about. The difference that two weeks makes is quite shocking as pointed out by the blogger. It will be interesting to see if the Japanese banks can capitalize on the increase in demand or if they will ultimately suffer like the rest of the economy as a result of the fear created by the disaster.

http://www.economist.com/node/18233464?story_id=18233464