10月　月例報告　　　　　　　　　October 11, 2018

　　　　　　　　A decade after the ‘Lehman shock’

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　Kazuo Miura

I　　Session of singing foreign songs of our circle “E-news & Songs”

Before starting debating session on an editorial of the Japan Times at KG Lambuth Hall in Sapia Tower, we enjoyed singing golden oldies in English at a nearby Karaoke bar which is set once every three months as a fun day.  Each one of us sang favorite songs paying attention to pronunciation and expressive power. It was also a good chance to understand profound meaning of songs precisely　in English.

 

II   Debating session by reading an editorial of the Japan Times  

This time, we picked up “A decade after the Lehman shock” from various editorials of Japan Times. The editorial of the topic today covered as follows.

  1. General observations and overview of Lehman shock

  2. Causes and processes of the impact from its start to the disastrous stage,

  3. What happened in Japan,

  4. How the world reacted the adequate measures and tried to recover from the catastrophe,

  5. Whether such countermeasures have been successful, and what were unsuccessful results discovered,

  6. And as a conclusion, how should we examine ongoing huge bad debts in the world?

    It has been increased by 70% more than that ten years ago, at the time of the Lehman shock.

 

III   Discussion on Three Points

We usually discuss main points of each editorial on the background of the above mentioned protocol both from contents themselves to the linguistic standpoint of English diction. But today, we determined to focus on the sixth prerequisite; thereby we set the three questions out of the six categories.

Under the supposition that it is virtually certain that some mighty financial meltdown (catastrophe level) would arise, A) what would be potentialcauses and/or triggers of the upcoming global financial catastrophe, B) what could be the countermeasures, C) what can we do for refraining our private assets from being decreased.  Our discussion then was focused on ‘A’ due to time constraints.

 

  1.  What will be possible causes and/or triggers of the upcoming financial catastrophe?

A variety of causes and/or triggers were suggested by attendance and the following were raised in common.

  1. US investments for real estate is being overheated and its loan amount is exceeding the Lehman shock level due to an environment of low interest rates that has persisted for over a decade as investors seek higher returns that animated the original crisis. Again, as the same process of Lehman shock, banks and financial institutions may go bankrupt. A lot of private companies and institutions may be liquidated and invite the new financial catastrophe.

  2. Trade war maneuvering import tariff will merely raise the cost of the manufacturers through higher cost of imported material, thus inviting confusion of the world car production system, and finally resulting in car business stagnation to be estimated by 1-2% of economic growth rate. By this trigger, it might influence other sectors and the world will be induced to financial catastrophe. Trump’s policy-making style is indicative of a role as a disrupter.

  3. China is holding huge bad debts by both the government itself and by shadow banking sectors.  It is roughly estimated 600 trillion yen, 40% of China’s GDP. China is investing huge amount of money for building infrastructure in developing countries based on OBOR (one band one road) strategy. The shadow banking sectors are also enhancing over-investment for real estate and other industrial sectors. The potential collapse of the financial system of China or tailspin of some of the leading enterprises and/or announcement of slow-down of growth rate of GDP of China may trigger global financial disaster.

  4. Very unique possible cause and/or such trigger raised by the attending members were unexpected military disputes among US, Japan, and China. One insisted that China and Russia may meddle with Japan trying to trigger partial disputes in Japanese territorial sea. Japan’s SDF and US forces may cope with their attempts. Territorial issue of South China Sea is a big potential of war risk between US and China. Conflict or unexpected military actions between warships of US and China will make timely handling of global and economic crisis more difficult and may lead unavoidable worse speculation for the future.

  5. Britain’s strategy to exit EU will not be completed by the deadline. Various confusion may happen in every field of economy, politics, national security in the region. Other EU members will be unexceptionally involved with the global tide and economy of the world will be stagnated. Such confusion may become trigger for transformation of the world economy.

     

    Many other suggestions on causes and/or triggers were also raised but they are omitted from this report due to space constraint.

 

B)  What are effective counter measures?

There was little time to discuss and too difficult to think of, only basic concept was discussed. In the future, any financial measures including developing monetary rules and establishing to recover economy are difficult to be agreed due to each nation’s egoism prevailing in the world. Especially leading countries’ behaviors appear to be very serious stage at present if viewed from such point. Among the most important is to restore to have our resolve of global cooperation. For that purpose, it is vital that Trump should be expelled or at least Trump will change his policy of America First. It seems that there lies very difficult circumstance in developing best suited countermeasures.

 

C)  What should we do to refrain from our private assets being decreased.

  There was no time to discuss, but the following is the proposed action or desire for us at this moment.

  1. Let’s buy gold. Change 1/3 of bank deposit to such precious metals as gold ingot, platina ingot, or silver.

  2. If you prefer to take risk, you should purchase financial products targeting the U.S.

  3. Sell your stocks. Never wait until the price of stock reaches its high again.

  4. We need truly trustworthy world leaders who will devote themselves to make the world get on right and better track in a serious way.

 

On the very day today (October 11, 2018), Sears and Roebuck and Co., the most famous and oldest department store and catalogue sales company in Illinois, went bankrupt. The New York Stock Exchange Market recorded decrease of Dow Jones Industrial Average by 800 dollars in a moment and Japanese Stock Exchange Market recorded decrease of Nikkei Stock Average by 800 yen also in a moment.  It seems some financial difficulty is rattling to us.