I find it hard to understand the logic of anti-tobashi reasoning set out in Richard’s posting below.

The logic seems to say this:  when markets collapse it may be inevitable that some banks will be reluctant to extend loans to some distressed borrowers. But so be it.  Those who cannot repay their debts on time should accept their fate, sell off their assets (including land), sack their employees  and hope to repay some of their borrowings from the wreckage, even though their collapse was the fault of others. The fact that in the process they provide a further dangerous push to the overall collapse in asset values does not matter. They have done the right thing. They are the virtuous.

Meanwhile those who can get the loans off their books by passing them off onto the books of some other business entity (while continuing to pay whatever interest may be due), and so help avert the dangerous collapse both in their own fortunes and that of the economy are the sinners. 

Is there any sense in that? True, Richard’s point about the close links between banks and industry in Japan did do something to help companies in distress. But not loners like Olympus.

And were not those close links often criticised by purist economists as helping maintain zombie companies? 

True, in the process of tobashi debt unloading corners are cut, figures are fudged.   But only some moralist obsessed with book accountancy rectitude would worry about that. The company, not to mention the nation, has been saved.

We used to have the same purist obsessions in Australian.  If companies, even good companies bringing new technologies or employment,  couldn’t survive without some form of protectionism then let them go to the wall.

The result is that virtually the only import competing industry we have left today is a totally inefficient arms industry said to be needed to protect us from China – the new form of protectionism.

But we did maintain the principles of free trade and competition.  

Re the Richard Katz information about who did what when, of course tobashi continued well beyond 1990.  The economy collapse continued well beyond 1990. Olympus was borrowing money even after the 1990 collapse?  Of course, it still had to pay off debts, and maybe it

had made the mistake of believing numerous government, Nikkei and other promises that austerity policies would lead to recovery. 

Re the Koizumi-Takanaka era, was it not notorious for its determination to prosecute tobashi offenders even those later found to be not guilty, ie to have begun their evil tobashi ways before such ways were declared illegal. This surely had a depressing effect on industry.

I see similarities with the ‘Recruit scandal’ in the Olympus witch hunt.  Recruit’s ’sin’ was to make sure a new share offering ended up in the hands of people it trusted or liked, including some respectable politicians and media people. Before Recruit, the security companies made sure much of new share issues ended up in the hands of gangster friends, corrupt politicians and fat-cat speculators. 

Fortunately the excellence of Recruit’s activities allowed it to survive, though it did mean losing its owner for the sin of being a brilliant individualist and non- member of Japan’s cosy industrial club. 

The ease with which Japan’s lazy media get caught up in non-scandals while ignoring real scandals is unfortunate.