But falling prices also make it harder for companies to repay their debts, a phenomenon that is adding to the pile of nonperforming loans that banks hold.
C1 Japan Audit Finds More Debt Japanese financial regulators have found an additional 1.4 trillion yen $10.6 billionn) in nonperforming loans that must be written off by the country's 13 largest lenders, according to a special audit.
Officials said about 30percentt of the loans in the deal on Wednesday were nonperforming, meaning that payments were not being made on them, but said that percentage could increase depending on how much the houses being financed had dropped in value.
The "chaos" argument does provide a rationale for minimizing public expenditures on poor children, on the grounds that they are damaged human capital, nonperforming assets, sunk costs that can never be recouped.
The European Central Bank, they say, could inadvertently spawn a cohort of "zombie banks," burdened by nonperforming loans and assets that remain on the books, like the ones that helped make the 1990s a lost decade for Japan.
The Marshall & Ilsley Corporation, a small Milwaukee-based bank, indicated Tuesday that the percentage of its loans that were nonperforming dropped from the previous quarter for the first time in four years, though Marshall & Ilsley has been more aggressive in dealing with its problem loans than many of its peers.
Analysts say the policies probably encouraged loose lending standards, which could increase the likelihood of a sharp rise in nonperforming loans - something that seriously threatened state-run banks less than a decade ago.
For the last decade, Japan's banks have struggled to write off an estimated 150 trillion yen $1.2 trillionn) in nonperforming loans, a mountain that has grown as the economy weakens.
Today, Standard & Poor's took note of the Takenaka plan's "more stringent self-evaluation standards" for banks and warned that "nonperforming assets are likely to increase substantially" through March.
China's dependence on rapid economic growth to maintain political and social stability, coupled with a fragile banking system laboring under an extremely heavy burden of nonperforming loans, means that any change should be gradual, Mr. Corrigan said.
