The Nov. 9 front-page article “Olympus admits hiding losses since 1990s” comes as no surprise. Many companies that were hit hard by reckless risky behavior during the bubble years, be it in securities or properties, had hell to pay in subsequent years.
Then again, at the dizzying height of the bubble years, it was hard not to get swept away. Richard Koo’s book “The Holy Grail of Macroeconomics” explains best what happened in the postbubble period. Many companies had to clean up their balance sheets by slowly unloading assets that had risen in value over time but had remained undervalued on the books. Unloading them enabled some companies to restore their balance sheets. Of course, this was done silently in the hope that the public would not discover the cleanup until after the company had been rehabilitated completely. Unfortunately for Olympus, it has become public knowledge.
After what’s happened in the United States, many companies are engaged in the same cleanup. In time, we will know more about which companies are under water. The case of Olympus is by no means unique to Japan. Companies in Wenzhou, China, for example, are closing shop because of investment losses in market and property speculation. There’s more to come from the U.S. and EU countries in the years to come. Relax and enjoy the show.
The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.
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