Finance Minister Kiichi Miyazawa offered an apology Tuesday at the Diet for errors he made in fiscal and monetary policies before and after the bubble economy of the late 1980s.
“Looking back on policies during that period of time, there are many regrettable points. I am truly sorry for this,” Miyazawa said during a House of Councilors plenary session.
His remarks were in response to strong criticism from Shoji Motooka of the Democratic Party of Japan, who called Miyazawa a “class-A criminal” for creating the economic bubble and then letting it burst, bringing on the nation’s current economic woes.
Miyazawa was finance minister from July 1986 to December 1988, during which time the economic bubble started ballooning. He then served as prime minister from November 1991 to August 1993, when bad loans started piling up in the aftermath of the bubble’s burst.
As the nation faced unprecedented economic difficulties brought on by the yen’s steep rise against the dollar following the 1985 Plaza Accord, the government engaged in massive fiscal spending and carried out aggressive intervention in the currency market, generating excessive liquidity in the money supply.
The crucial mistake, however, was made immediately after the “Black Monday” stock market crash in New York in October 1987, Miyazawa said.
Although the government clamped down on bank loans for real estate investment in April 1990, the move came too late, he said.
Bad loans are now the government’s main concern. The government had earlier disclosed that 35.2 trillion yen in nonperforming loans, as calculated according to standards set by the U.S. Securities and Exchange Commission, were held by private financial institutions as of the end of March.
The government and the Liberal Democratic Party presented a set of six bills to the Diet last week to implement the “bridge bank” scheme and other measures to promote aggressive disposal of bad loans and stabilize the nation’s financial system.
During Tuesday’s session, however, Motooka urged Prime Minister Keizo Obuchi and his government to accept an alternative financial stabilization plan put forward by his party to counter the government’s six bills.
The DPJ’s proposal differs from the government’s plan in that it calls for creating an committee independent of fiscal authorities to oversee liquidation of failed banks. “We have prepared our own financial system restoration bill, which would complete the disposal of bad loans by 2001,” Motooka said. “If you intend to truly restore the financial system and revitalize the economy, then you have no choice but accept our proposal.”
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.