Japanese financial institutions had an abundant cash

The two issues concerning the Japan which I am most often faces these days are lessons that other countries can take the Japan's financial crisis and on the ability of the Japan to save the world in the financial apocalypse.

These questions are legitimate. With regard to the first, it is natural to believe that one can learn from the experience of the Japan, who has known the bubble of the 1980s and consecutive recession of the 1990s. The second question, perhaps less relevant, is understandable. The Japan was not the epicenter of the current financial crisis. Japanese financial institutions had an abundant cash. It is not unreasonable to consider the country as a potential savior in a situation that seems hopeless. As in response to this call for help, the Mitsubishi UFG financial group has strengthened its participation in Morgan Stanley, while Nomura bought out certain activities of Lehman Brothers.

But back to the first question, the lessons of the Japanese crisis. We can say that it is too late. Our experience should have blow us that kind of madness that led to the crisis of the "subprime" would lead the world on the path of self-destruction that we had followed at the time. Japanese banks, and financial regulators, should have, if not shouting on the roofs of at least whisper to their counterparts in the rest of the world the potential consequences of such a situation. What utility was the Japanese experience after the event Why then were we step is to put others in custody against the same mistakes that we have committed a few years ago

At the point where we are, there is a lesson from the Japanese experience, it is as follows: resuscitation systems are the more difficult to remove once they are in place. In the State of things, the world economy as a whole is about to become a gigantic intensive care unit, providing capital injections, guarantees of loans, total deposit insurance. All possible devices help to survive were in place to restart the global financial system.

Of course, there was no other solution. When it comes to life and death, all the measures taken are a necessary to stem the crisis. However, resuscitation equipment should, by definition, represent only a temporary support. The fact of relying on such measures prolonged can only cause endogenous problems. This is certainly the most important message that can now send the Japan to other countries in financial crisis. Once these systems of Resuscitation in place, the first thing which it will need to consider will be their removal procedure. Otherwise, they will remain for ever, unless it is known that, the patient or the machine, keeps the body in life.

After all, the Japan is not yet completely free of the zero rate policy that he had put in place to combat the deflationary consequences of its own version of the credit crisis. We still don't know how to include our economy in a context of more "normal" rate of interest In addition, one can argue that it is the rate zero of the Japan that spawned globally these surpluses of liquidity the cause of all this financial fever. Emergency resuscitation equipment are actually too dangerous to be handled with lightness.

As to the possibility that Japanese banks become the White Knights of the global financial system, I would certainly not top bet. This is a subject I already discussed in this column. It is feared that Japanese financial institutions had the eyes bigger than stomach, a fear which is already beginning to check with the release of their latest results. But perhaps it better as well, because the world has certainly more to gain from our mistakes than from our capital.