Word: bailouts
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Koizumi's challenge is to orchestrate another bailout of Japan's banks (the fifth since 1998) while forcing them to call in nonperforming loans. For four years, Washington has been urging Japan to resolve its banking woes by setting up a government bailout fund, as the U.S. did during its savings-and-loan crisis in the 1980s. But Japan's bank debacle dwarfs the S&L crisis in both size and political complexity. Real reform means unraveling decades of interlocking commitments blessed by a system that rewards support with favors...
...wanted to avoid layoffs, that companies would recover when the economy perked up. The real story is that Tokyo's instinctive reaction has been to dole out government contracts to construction companies and make banks provide cheap capital to keep retail empires going. (In January, the government backed a bailout of struggling Daiei Inc., a retailing giant that needs $3 billion from its main creditor banks to stay afloat.) This kind of propping up and bailing out is expensive: healthier parts of the economy and eager entrepreneurs get starved for loans. Until 1998, Tokyo couldn't even admit...
...maneuver?he is legendary for scooping up unfashionable assets at bargain prices and selling them later for a fat profit. Among other recent coups, the billionaire bought into American e-tailer Priceline.com following the crash of Internet stocks, and saw his stake triple in value. The Global Crossing bailout would hand the partnership majority ownership in a state-of-the-art, globe-spanning telecommunications infrastructure for an outlay equal to less than one-tenth the cost of building it. "I think at that price it's very attractive as an investment," says To Chee Eng, a telecoms analyst for Gartner...
...That's assuming the deal goes through. In the wake of the Enron debacle, questions are being raised about Global Crossing's aggressive accounting practices. And even if a bankruptcy judge approves the bailout, it could take another dotcom boom for the investment to pan out. Li, however, doesn't mind taking big risks for big rewards...
...Deputy Secretary he slipped up and said that those favoring a repeal of the estate tax were selfish. A strong push for new regulation on corporate tax shelters went against the hopes of the business community. And as a chief architect of the administration’s 1995 bailout Mexico’s failing economy, Summers was often a lightening rod for criticism...