GDP (gross domestic product)
First, prior to the description of the economic policy and monetary policy
Explain the GDP, which represents the backbone of the Japanese economy.

GDP (gross domestic product) and is,
Is the total amount of the added value of the produced goods and services in the country.
In terms of Japan, the Japan of the GDP, but production activities of domestic foreign (companies) are included,
Not included in the production activities of overseas Japanese (companies).
That is, when divided at the border to Japan,
Or production activities are created how much value-added?
Which is an index that represents the.

Gross domestic product / private consumption / private investment / government spending / export / import
GDP　　 　　　　　　　＝　　　　C　　　　　＋　　　　I　　　　＋　　　　　 G　　　　　　 ＋〔X−M〕



That most accounts for a large proportion is private consumption,
Consumers is to buy goods and services.
If consumption is sluggish, greater impact on the overall economy.
For private consumption, it is greatly related to national income.
Also, the calculation formula of the national income, macro theoretically consumption function and investment function,
And money demand function, are those savings function has a great relationship,
Specialized ministries or, or listen to the macro-economic expert,
It is appropriate to refer to the data (documents). (SCG GROUP, Inc.)






Economic policy and monetary policy
Economic Policy
In economic policy, it is often operated by a combination of fiscal policy and monetary policy.
At the time of recession, the government increased spending as fiscal policy,
Whole Increasing the G (government spending) so that the increase.
On the other, as an additional budget of when not enough of the usual government budget (the budget),
Tend to set up a supplementary budget is Yes for a long period of time,
It has led to significant government debt increase.



The government is also trying to expenditure budgeting, there is also a case where there is no money.



If you say so, to raise by issuing government bonds.
Government bonds and is a bond to be issued in order to collect the money the country is not enough.
In other words, the country of debt.
In short order of the amortization period, there is a short-term government bonds and medium-term government bonds and long-term government bonds,
No longer rotate neck in debt and government bonds dependence is high,
There is also the case that the budget deficit → financial collapse,
Each country is also struggling to economic growth policies and strategies.
More and more debt reliance With chronic becomes stronger,



While there is no economic growth strategy, the bulging one after another is government debt.



Japan is also a country of a lot of debt country.


Tax reduction also in fiscal policy.
Government revenue is reduced, but increased I (private investment) is, the economy will be better.
Also increased tax revenues of corporate tax and income tax, as fiscal policy,
Tax reduction is also a strategy to stimulate the important economy.






Then try to investigate the monetary policy.










Financial policy
Jurisdiction ministries of monetary policy in Japan is,
Ministry of Finance (top, the Minister of Finance), but,
To control or adjust the amount of interest rate currency,
It is: (Bank of Japan commonly known as) the Bank of Japan.
At the time of recession, or lowering the interest rate to make it easier to borrow money,
By increasing the money itself
The mechanism by which C (private consumption) and I (private investment) increases.
Conversely, in the economy is getting better, and less likely to borrow to raise the interest rate tightening and prices or to rise.

In other words, it is why is adjusted by tightening the purse strings as inflation measures.
The Bank of Japan is the act (weaker yen induction) to the dollar-buying even recession,
Japanese companies that have been growing in the export industry as mainly in the manufacturing industry,
There is an effect as monetary policy.


Such, in order to or working to price stability or to adjust the economy
You say that you do a combination of fiscal policy and monetary policy and the policy mix.
Japan, which has placed the center of gravity in the fiscal policy,
In the West, the center of gravity is placed on monetary policy.



The government is also monetary policy should do.



It is public funds.


Public funds and is, that of tax nutshell.
In the past, to inject public funds of 7 trillion yen to several major city banks scale,
Although capital adequacy ratio of the bank has been improved,
Bank becomes uncollectible in the money lent to the companies,
There is also a process is delayed era.







Zero-interest-rate policy
There is also anyhow become not the case in the fiscal policy.
In such cases, the interest rate zero (zero interest rate policy)
Take measures to avoid a deflationary spiral.
If interest rates zero, the bank is likely to borrow money,
Financial uncertainty is dispelled, the management of the bank itself is stable.
After that, the bank is the economy is stimulated to lend money at a lower interest rate on the company,
It says to be able to avoid the equipment of the deflationary spiral down the monetary value
Is a monetary easing measures by the Bank of Japan.


Is a first-aid measures policies in domestic demand helix (spiral) shape,

If you do not find a clear domestic demand, external demand innovation (innovation),

�@Reduction of corporate tax revenue
�AReduction of income tax revenue
�BFalling prices → price cuts
�CReduction of private consumption, sluggish
�DLead to an increase in corporate bankruptcies, and finally,
�EDecline of international competitiveness ...

It would be falling into the way of the vicious cycle that does not escape. (SCG GROUP, Inc.)


Government to ensure that this kind of thing is not happening, not rotate to iron,
Must always be reviewed economic recovery circulation drawings (structural reforms).






Structural reforms
To envisage the economic recovery cycle diagram, first,

�@Review the industrial structure
�AReview of the financial system
�BReview of deregulation
�CFiscal structural reform
�DFiscal structural reform of the national and local

It must be reviewed this circulation diagram.



So, why not at once the structural reforms?



In other words, the invisible part of especially banks and corporations and the structural reform
(Part of the poor) have started out openly, because the economy is deteriorated.
It is a large amount of bad debt problems that banks face.






Reluctant bad loans, loan
The bad loans, in the money that the bank is lending to companies, uncollectible or,
Fear of certain things that become uncollectible.
Bank side, in order not to increase the bad debts,
Other than the company that repayment can be reliably process, would take the selection choices to say that not lend.
For this reason, the bank is strictly a loan (lending) criteria,



Quite it will not lend money.



It says the credit crunch this.

It is taken in order to maintain a capital adequacy ratio of the bank to more than a certain level
Is one way.
However, when promoting the disposal of bad loans in earnest,
Companies with no money, bankruptcy ...



Result to say that there is only collapse.




A result, also increase unemployment if the increase in bankruptcies of companies.


Job insecurity is spreading, even lower consumption.

GDP fell, drop out of the structural reforms.

Put money into public works.


Still, not economic recovery.


Further swell the budget deficit.


Once again, the structural reforms.


Proceed with the disposal of bad loans.


The economy is worse ...

A repeat of this vicious circle.






Financial Reconstruction Law disclosure receivables
For non-performing loans, it is being generalized to see in the Financial Reconstruction Law disclosure receivables.
Financial institutions, for its creditors, the debtor of cash flow,
Analyzed from the viewpoint of such as financial disclosure and profitability, receivables to the problem Aru debtor,
It has been mandated by the Financial Reconstruction Law to disclose the amount.


This is the Financial Reconstruction Law disclosure receivables.



As having been similar, by the Banking Law



There is also a problem loans, the disclosure of the amount has been obligated.



This is called risk management loans, the definition specifically is almost the same.
It should be noted that, more than 80% occupied by the non-performing loans,
It performs a street operating activities generally,
A receivable (bad loans) for live debtor. (From the Tankan business survey)







Criteria of bad debts
�@ there is no clear boundary lines between bad loans and normal loans.

�A also Pull the boundary line was sorting the bad loans and normal loans provided certain criteria,
Movement of the debtor has occurred beyond throughout its line.

�B at the boundary line of vague criteria, the corporate management who are in that either,
Produce a significant impact related to the life-and-death.

Even during the bankruptcy reorganization receivables and doubtful loans, substandard loans in non-performing loans
It is not possible to draw a clear boundary line to distinguish between these.
Receivables held by the financial period, when arranged in the order of recovery concern degree
There is no separated from bankruptcy reorganization to normal loans.
In the middle on a regular basis of the separator provided earlier is after a successful loan from here
It is to say that not only has been sorting and bad debts.
Once, when it is recognized as a non-performing loans, additional loans from financial institutions,
Received is no longer first, also will be forced to repay the loan.


For corporate management would then be cornered in a difficult situation.




(From the Tankan business survey data)





Therefore, it is of a soon perspective about the outlook for the situation, the future of the corporate management. (SCG GROUP, Inc.)







Disposal of bad loans
For the bankruptcy reorganization such as receivables of the non-performing loans,
Even the government does not promote processing, so that the bank itself immediately processed.
Therefore, by the disposal of non-performing loans fabrication of the government, what is the target of processing,
Doubtful loans and non-performing loans that are currently alive is subject.
The disposal of bad loans, which say the government,
It is to erase the debt itself from the balance sheet of the bank.

In that way, but there is also a debt forgiveness, debt sale, etc.,
The main thing is to organize the creditor company.
In other words, what can be recovered by collateral disposal, etc. were recovered,
The remainder is that the financial institution is treated as a deductible. (From the Tankan business survey data)






What is no longer bad debts are treated?
The disposal of non-performing loans promotion policy,
The presence of non-performing loans and is the inhibition factor of economic recovery,



It is possible to handle this has become necessary.



Really, bad debts wonder no longer with the process?











Let's examine the past of statistics.







Changes in non-performing loans (Financial Reconstruction Law receivables)
(from 1995 to 2003 fiscal year the Financial Services Agency estimates Summary) (Unit: trillion yen)
　　　　　　　　　　      　　　　　　　　　　　　　　　　　　　1998　     1999　     　 2000　     2001　　     2002　     2003
Commercial banks, Choshingin and trust　    　　　  21.9    　　20.4    　　　20.0    　　28.4　 　    20.7　 　  13.8

Regional banks　　　　　      　　　　　　　　　　　　　　　12.0　   　 11.4   　　 　13.6　  　  14.8    　　14.6    　　12.8

(National Bank)　  　　　　　　　　　　　      　　　　　   （33.9） 　 （31.8）   　　（33.6） 　 （43.2）  　 （35.3）  　（26.6）

Shinkin-credit cooperatives, etc.　　　 　　　　　　　 　8.7　　　　 9.1    　　　　9.4     　　　9.2     　　 9.2　     　 8.0

Deposit-taking financial institutions total　　　　　　42.6　　　　40.9　　 　　43.0　　　　52.4　　 　 44.5　　　　34.6

※ 'processing' amount, 'direct amortization loan allowance reversal of allowance
(the end of the previous fiscal year reserve balances year in the provision - ending balance)' in the year calculated as
If carried out 'processing' of non-performing loans, from the banking book, by collateral disposal and the like in addition to this,
since erased the recovered amount,Actually 'processing' has been bad loans will be greater than this.


The amount of bad loans banks of Japan has processed is expected to more than 80 trillion yen in Yu.
74 trillion yen in the total amount of the reversal amount and direct write-offs of loans allowance ...
To do this, the amount of bad debt that has been recovered by collateral disposal will number in excess of this.
While this by the amount of has been erased from the books of the bank, there is still a 26.2 trillion yen of bad loans (risk management loans).
Initially, there was a non-performing loans of around 100 trillion yen is processing 80 trillion yen or more, became the 26 trillion yen over.
The balance of the end of fiscal 2003, but more than 26 trillion yen, not decreased only about during this 2 trillion yen.


During this time 80 trillion yen or more of non-performing loans is that that occurred.


In other words, the non-performing loans be treated with non-performing loans, but no longer, as a result of the processing
The circulation action to say that another new bad loans if the economy worsens occurs.
Thus, while not advancing economic recovery is because there is a bad debt is a fact,
Because always occur 'bad debts, it should not be the basis to say that to be a problem the solution of the economic recovery.
The history of bad debts is repeated. It is to say that. ' (SCG GROUP, Inc.)

To say that to handle the bad loans,
As a result, even in the rising companies that are currently active,
If the debt and the performance balance is bad, it will be crush the company,
If further large amount of non-performing loans to the recession, or were postponed,
Would be to say that leads to an increase in the increase, unemployment of corporate bankruptcies.
Then, if the economy is bad, even business share while somewhat increased,
Business image is down, even management is severely remaining companies.
It is the way of non-performing loans in the past the 1990s. (SCG GROUP, Inc.)







The disposal of non-performing loans promotion
2001, under the influence of the United States of the economic slowdown,
Japan has recommended the policy to say that hasten the disposal of non-performing loans to financial institutions.
This was one the main pillars of the 'emergency economic measures.'



It is possible to hasten the disposal of bad loans to financial institutions
Or become a pillar to prevent the decline of the economy?

Later, it has been incorporated as part of the 'structural reform' policy.
Earlier that are considered non-performing loans (creditor) is considered to be a stagnant field,
To release the early process to get there is poured is to have economic resources (labor and capital),
By moving to the field of growth,
Field in order to growth can be growth, but also growth Japan's economy ...
If the disposal of non-performing loans promote the economy will be better. It is a logic that.

Economy from stagnation field is too tuck the economic resources is bad.
Does not lead to recovery of the economy even if the bad recently the process (removal of the stagnation field).
Market than had been left to the (negotiations with private financial institutions and companies) are
Lachi (Lachi) is not red.


When is a 'structural reform' policies that listed the time of government ... Prime Minister Koizumi.



The presence of non-performing loans were those ginormous. (SCG GROUP, Inc.)

Impediments to economic recovery
'Bad debt problem is a mechanism to depress the economy.
To resolve the bad loan problem is essential for the reproduction of the Japanese economy. 'When
It has been claimed in the Japanese Economy and Public Finance White Paper.


As a factor

�@ by bad debts, are compressions bank earnings financial intermediary function of banks has declined.

�A current situation where banks are having bad debt, in the field of low profitability, low productivity and
Economic resources, such as employees and management resources, capital and land is also stagnant forever,
Resources to high profitability and high productivity field has not been allocated.
Due to Bank of bankruptcy
�B, a decrease in confidence in the financial system
Gently the behavior of businesses and consumers, and push down on the capital investment and personal consumption.

�C bank side, the bad debt problem enterprise side, is closely related to the excessive debt problem.
Even if there is a new good investment projects, it is not made funding from the bank side,

Corporate side to give priority to debt repayment, not carried out capital investment.

Therefore, it must hurry to disposal of bad loans. (Than Japan Economic and Fiscal Policy White Paper)






For economic recovery requires the disposal of non-performing loans?
National Bank bad loans increase and decrease and the factor (Unit: trillion yen)
　　　　　　　　　　　 　　　　　　　　　　　　　　　 　 　　2002　　　 　　　　　　2003

Off-balance sheet　　　　　　 　　　　　　　　　　　　　　　　　　　　　 （▲15.1）　　　　　　　（▲9.8）

Health debts (including repayment)　   　　　　　　　　　　　　　 　 （▲ 3.1）　　　　　　 　（▲5.5）

A new generation　　　　　　　　　 　　　 　　　　　　　　　　　　　 　  （　10.2）　　　　　　　　（　6.6）

Increase or decrease the total during the year　　　　　　 　　 　 ▲ 7.9　               　　 ▲8.7

The ending balance (2001 43.2) 　　　　　　　　　　　　　　　　   　35.3                　　　 26.6

The Financial Services Agency, since 2002, to divide the non-performing loans to less than substandard loans and doubtful loans,
That what the factors of change has been off-balance sheet ( 'processing' has been that disappear from the balance sheet of the Bank
Those healthy receivables of (what was regarded as non-performing loans, the better the business management,
Normal receivables and can be regarded as to become ones) repayment has been one-business conditions improve, or,
Those that have been moved into the non-performing loans by the business conditions worsening and new generated ones (those that had been considered normal receivables,
Worsened the situation of the corporate management, has published separately in non-performing loans has been one).

Based on the above published article (change of fiscal 2002 and fiscal 2003),
Looking together the entire non-performing loans (Financial Reconstruction Law receivables), a new generation of non-performing loans is reduced,
Noticeable that the health debts are increasing. This, despite the amount of off-balancing is decreased,
A factor that reduced the amount of non-performing loans has exceeded. In other words, an improved corporate management by the economy has recovered,
Non-performing loans was normal debts, reduced also the new accrual In addition,
Increase of non-performing loans for the well which is a result of the deterrent.

In order to this point, it was found suppressed bank lending because there is a bad debt,
Investment (capital investment) is also suppressed to've had a point to say that the economy is not well.
Looking at the facts of the change in the fiscal 2002 and fiscal 2003, non-performing loans has been reduced.
However, bank lending Despite the remains was suppressed,
Capital investment, the economy increased from 2003 to 2004, was restored. (From bad debts public documents)
In other words, the theory that says 'for the economic recovery, the disposal of non-performing loans is required.' Are overturned from the root,



This theory is proven in bad loans increase and decrease the numbers of 2002 and 2003 that it is a mistake,



A result,
by the medium- to long-term management plans and amortization life, etc. of the company regardless of the 'economy,
Capital investment is. We came to the conclusion to say that. ' (SCG GROUP, Inc.)

Then try to investigate stock investment in supply and demand.













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