Prime Minister Junichiro Koizumi's "No Pain, No Gain" approach to mending the economy will accomplish little more than a surge in bankruptcies and unemployment, Teikoku Databank warned in a report released Wednesday.
"The pledge to go through with final disposal of banks' bad loans (within two to three years) has the very worst timing . . . when the economy is headed for a downturn and at the same time that financial and fiscal policies can do little to help recovery," said Katsuyuki Kumagai, general manager of the private research institute's information department.
The estimated 12.7 trillion yen worth of nonperforming loans held by the nation's 16 major banks can be divided into two groups: those made to large firms during the asset-inflated bubble economy of the 1980s, and more recent loans to small and medium-size firms, the report said.