What Needs To Be Done
FIX THE BANKS
The banks must submit to independent audits to determine the true extent of their bad loans and mark them to market. Regulators must shut down or sell insolvent banks. A trust fund must sell off bad loans at a discount and auction off distressed real estate.
CHANGE THE ACCOUNTING
To determine the true quality of assets and profits, Japanese companies must adopt international accounting standards. That means consolidated balance sheets, pricing assets according to their market value, and opening up books to independent auditors and credit agencies.
REWRITE THE TAX CODE
Japan's tax system encourages excessive investment and borrowing by corporations to mask profits. So corporate taxes need to be lowered to international levels.
AUDIT THE GOVERNMENT
The government must disclose the true level of off-book liabilities contained in the so-called Zaito budget controlled by the Finance Ministry. Bad debts should be disclosed quickly and dealt with.
STOP THE MARKET RIGGING
The government must stop using postal savings and pensions to prop up the stock and property markets. Only then will prices accurately reflect the actual value of assets.
DATA: BUSINESS WEEK
RELATED ITEMS
 - MAIN STORY: JAPAN'S REAL CRISIS
- COVER IMAGE: Japan's Real Crisis
- TABLE: Japan's Debt Trap
- TABLE: What Needs To Be Done
- COMMENTARY: WHY AMERICA WON'T BE NEXT
- CHART: One Bubble or Two?
- COMMENTARY: WHY JAPAN WON'T ACT TO SAVE ITSELF
- ONLINE ORIGINAL: THE CRISIS HITS HOME IN HOKKAIDO
- ONLINE ORIGINAL: CLYDE PRESTOWITZ: VIEWS FROM AN OLD JAPAN TRADE HAWK
- ONLINE ORIGINAL: INVEST IN JAPAN? IT'S NOT OUT OF THE QUESTION
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