| BUSINESSWEEK ONLINE : APRIL 12, 1999 ISSUE | ||||||||
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| INTERNATIONAL BUSINESS
The Liquidity Trap Japan has cut its official discount rate to 0.5% and short-term rates to nearly zero. Yet the economy isn't growing. Here's why: BANKS Burdened by bad debts and short of capital, they aren't lending. Instead, they are putting excess reserves in the bond market. COMPANIES They have little incentive to borrow to finance new investment because industrial Japan is already saddled with excess capacity. CONSUMERS They are so anxious that they are saving, not spending, even though bank deposits yield less than 1%. DATA: BUSINESS WEEK _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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