22-Dec (Financial Times) — A few weeks ago, some senior officials at Bank of Tokyo Mitsubishi spotted a fascinating fact: for the first time the volume of Japanese government bonds sitting on the bank’s balance sheet swelled above corporate and consumer loans.
Yes, you read that right: at an entity such as Bank of Tokyo Mitsubishi, it is now the government – not the private sector – which is grabbing most credit, as the bank gobbles up JGBs, notwithstanding rock-bottom low rates.
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Welcome to a key theme of 2012. During the past four decades, it was widely assumed in the western world that the main role of banks and asset managers was to provide funding to the private sector, rather than act as a piggy bank for the state. But now, that assumption – like so many of the other ideas that dominated before 2007 – is quietly crumbling. And not just in Japan.
…Whatever you want to call it, then, the state and private sector finance are becoming more entwined by the day. It is a profound irony of 21st century “market” capitalism. And in 2012, it will only deepen.
[source]
Yes, you read that right: at an entity such as Bank of Tokyo Mitsubishi, it is now the government – not the private sector – which is grabbing most credit, as the bank gobbles up JGBs, notwithstanding rock-bottom low rates.
More
Welcome to a key theme of 2012. During the past four decades, it was widely assumed in the western world that the main role of banks and asset managers was to provide funding to the private sector, rather than act as a piggy bank for the state. But now, that assumption – like so many of the other ideas that dominated before 2007 – is quietly crumbling. And not just in Japan.
…Whatever you want to call it, then, the state and private sector finance are becoming more entwined by the day. It is a profound irony of 21st century “market” capitalism. And in 2012, it will only deepen.
[source]
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