As I have been saying, governments around the world would look for any excuses to print money and or extend bailouts or other political-financial privileges to pet sectors at the expense of the economy.
Japan mulls on extending new loans purportedly aimed at supporting her nuclear industry and to other sectors tied to the recent disaster.
Reports the Bloomberg, (bold emphasis mine)
Japan’s government is considering about 230 billion yen ($2.8 billion) in outlays for aid to Tokyo Electric Power Co. and radiation monitoring in its planned extra budget, according to a draft outline prepared by the Finance Ministry.
Prime Minister Naoto Kan’s government has yet to release details of the 2 trillion yen supplementary budget, which will need parliamentary approval. Officials will apply 1.8 trillion yen in tax revenue left over from the last fiscal year to help fund the package, according to the document, a copy of which was obtained by Bloomberg News.
The spending would be aimed at a nuclear crisis that remains unresolved more than three months after Japan’s record earthquake and ensuing tsunami crippled Tokyo Electric’s Fukushima Dai-Ichi reactor north of Tokyo. The utility, which has seen almost $37 billion of its market value erased, will hold its annual general meeting today...
Another 78 billion yen will be used to set up a fund for health care costs of people that were affected by radiation or live near the damaged reactor, the document said.
The cost of dismantling the Fukushima plant may reach 20 trillion yen, and compensation for households in a 20-kilometer evacuation zone may total 630 billion yen over 10 years, according to the Japan Center for Economic Research.
The draft budget also earmarked about 80 billion yen to help households that were indebted before the quake and now need to borrow more for repairs. Additional funds will be devoted to small companies affected by the natural disaster that left more than 23,000 dead or missing, according to the proposal.
Damage to buildings, roads and infrastructure will be around 16.9 trillion yen, the lower end of the government’s initial 16 trillion to 25 trillion yen forecast, the Cabinet Office said last week.
The government pledged 4 trillion yen in spending it its first extra budget, which was used to build temporary homes and clean up debris from the earthquake and tsunami.
As I earlier posted, Japan’s maintains a patronage crony relationship with the nuclear industry, and thus the proposed actions.
Second, I smell another indirect bailout of the domestic banking system. Japan’s mega banks have huge loan exposures on TEPCO which credit rating agency Moody’s recently threatened to downgrade.
From Businessweek.com
“About 2 trillion yen of loans to Tepco from megabanks and life insurance companies offered before the March quake would virtually fall to a default status if the financial institutions were to write them off,” Moody's analysts led by Tetsuya Yamamoto, Tokyo-based vice president of the financial institutions group, said in a report today.
Like any governments, politicians have no qualms on spending of other people’s money, especially for the benefit of their related or politically affiliated interests.
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