TOKYO MEDIA REACTION - U.S. FINANCIAL CRISIS

UNCLAS TOKYO 002563 SIPDIS STATE FOR I/RF, PA/PR/FPC/W, IIP/G/EA, EAP/PD, R/MR, EAP/J, EAP/P, PM; USTR FOR PUBLIC AFFAIRS OFFICE; TREASURY FOR OASIA/IMI; SECDEF FOR OASD/PA; CP BUTLER OKINAWA FOR AREA FIELD OFFICE; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR E.O. 12958: N/A TAGS: OIIP KMDR KPAO JA SUBJECT: TOKYO MEDIA REACTION - U.S. FINANCIAL CRISIS ¶1. LEAD STORIES: Thursday morning's Asahi led with the informal agreement between the ruling LDP and its junior partner New Komeito to dissolve the Lower House in early October for a snap election on October 26. ¶2. "Public Fund Used This Time around" On the USG decision to bail out insurance firm American International Group (AIG),the top-circulation, moderate Yomiuri editorialized (9/18): "The USG decision to rescue AIG illustrates ambiguities concerning the criteria used for the injection of public funds.... The U.S. financial authorities can be criticized for a double standard. A sufficient explanation is needed. A bailout (by the federal government) cannot be permitted to lead to moral hazard on the part of financial institutions. However, the U.S. authorities are also tasked with mobilizing all policy instruments available in order not to trigger a financial depression." ¶3. "Do Not Feel Relieved" The liberal Mainichi argued in an editorial (9/18): "With AIG's downfall averted, panic-driven U.S. and European financial institutions appear to be getting out of difficulty. However, they must not feel relieved.... Rather than waiting to make a decision in the eleventh hour, the U.S. authorities, as well as financial institutions, should make the best use of the current 'grace period' to make additional efforts to remove market anxiety." ¶4. "Fundamentals of Crisis Must Be Addressed" The conservative Sankei contended (9/18): "It is premature to be relieved. The financial market is still haunted by suspicions and anxiety. Fundamental conditions (concerning market turbulence) remain unchanged.... 'At your own risk' is one of the basic principles of a free economy. While that principle is acceptable in peace time, it is a matter of course to choose an alternate approach when confronted with a financial system crisis that endangers the overall economy. The USG should be aware of the magnitude of the current financial crisis, as well as its responsibilities in the international economy." SCHIEFFER