Word: depositing
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Dates: during 2000-2009
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...Stick with the Program Early action, however, is just the beginning. Japanese policymakers have learned the hard way that it takes years to leach toxic assets out of a financial system and restore confidence so that consumers shop rather than stash their money in safe-deposit boxes. While domestic demand remains sluggish, government spending has to take up the slack and keep at it. In Japan, a recovery was aborted in the late 1990s when, at the first sight of green shoots, the government raised taxes. President Barack Obama is committed to reducing this year's federal budget deficit...
...right. Since September, the bad news about banks has been nonstop - and not just at the top of the food chain. Although teetering giants like Citigroup and Bank of America grab the headlines, at the end of last year 252 institutions were on the problem list of the Federal Deposit Insurance Corporation (FDIC), up from 171 three months earlier. Seventeen banks have failed so far in 2009; expect hundreds more over the next few years. (See the top 10 financial collapses...
...these creditors? The biggest group, with outstanding loans of about $9 trillion, is depositors like you and me. When you deposit money, you're lending it to the bank. Those deposits were explicitly insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 before the crisis, and the banks paid for that insurance (though not in full, given that FDIC coverage has been raised to $250,000 and seems effectively without limit at bigger banks) and passed the cost on in the form of lower interest rates than on, say, an uninsured money-market account. That, plus...
...mainly by issuing bonds. About $2.6 trillion of bank funding in the U.S., 20% of the total, comes from such debt securities, according to the FDIC. At the most troubled of the big banks, Citigroup, the figure is 27%. (Citi's domestic depositors account for just 16% - its main deposit base is overseas.) These bank bonds are mostly in the hands of large, sophisticated institutional investors - pension funds, insurance companies, mutual funds. It may be too much to ask small depositors to monitor the risks at the banks where they put their money and pay for getting it wrong...
...success is to rely less on exports and more on domestic demand - a prescription that, a DPJ policy document says tartly, "has been on the table for the past 20 years." But Ozawa recognizes that to encourage the Japanese to shop rather than stash their cash in safety-deposit boxes, something more than exhortation is needed. "We have to give a sense of security to the population," he says. That implies, given the demographic challenge, real reform of health care and retirement benefits. Even the younger generation, Ozawa says, are "worried that they will not be entitled to any pension...