Word: japanism
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...prevent an economic meltdown, the government is forced to buy up billions of dollars worth of bad assets - raising taxes to pay for the program - as citizens seethe. That's the U.S., today. But the prequel to Nightmare on Wall Street occurred more than a decade ago in Japan, when epic real estate and stock-market bubbles burst - making it all the more remarkable that some of the international companies now prowling for bargains among the remains of battered U.S financial institutions are based in Tokyo...
...major deals on successive days show that Japan's banks have not only repaired their balance sheets over past 10 years, they're not shy about taking advantage of the current weakness of their American competitors in a fight for international market share. On Sept. 22, Mitsubishi UFJ Financial Group (MUFG), Japan's largest bank, announced plans to pay up to $9 billion for a 10% to 20% stake in Morgan Stanley, one of two major U.S. investment banks left standing. The announcement capped a frantic few days during which Morgan Stanley CEO John Mack sought a saving dose...
...Slowly but surely, Japan has reconstituted its financial sector after its Lost Decade of the 1990s, and now its firms are in a position to expand aggressively abroad. Japanese financial institutions shed some $440 billion in bad debt since the late 1990s and have been barely grazed by the subprime crisis, partly because they were reducing debt as western firms were taking on more and more. Now, the bargains available in the U.S. afford Japanese banks an opportunity to move beyond their mature home market. Japan's economy is the world's second-largest, but it is plagued by slow...
...Because many other Asian countries are growing at least three times as fast, most analysts view Nomura's acquisition of Lehman's Asia assets for $225 million as a steal. MUFG, too, was already looking beyond Japan for growth. In August, it paid $3.5 billion to buy the remaining 35% of Union Bank of California that it didn't already own. Union Bank of California has a relatively healthy balance sheet and its stock is undervalued, analysts...
...That left an opportunity for MUFG, and it took it. Time will tell if the Japanese bank made the right move. In the 1980s, when Japan was booming, its companies bought a series of U.S. assets - from movie studios to the Pebble Beach golf course - that subsequently plunged in value, generating a fair bit of xenophobic resentment in the process. Now, it's Tokyo to the rescue on Wall Street. The Japanese are hoping that having learned the hard lessons of their own banking disaster a decade ago, they can now make some money navigating the one unfolding across...