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Where vultures merely circle

Having bailed out loss-making companies, Japanese banks are bereft of capital. Their losses will become even more glaring now that they have to implement mark-to-market rules. And though the latest Nikkei slump was prompted by the attacks on the US, the adjustment is widely seen as fully justified. Selling out to foreign predators is one way out for ailing Japanese corporates but few buyers will be willing to pounce until targets are on their knees. Vodafone’s move to capture Japan Telecom has proved an interesting exception.

Masayoshi Nakamura

"The Nikkei is where it was 20 years ago. That's 20 years of lost value," rages a banker. "And the same people are still running corporate Japan. But not only have they done nothing, they've actually destroyed it. How the hell is that possible?"

Japan was holding its breath waiting for the inevitable. The Nikkei after all, had been teetering on the 10,000 brink for some time. But now that it has finally plunged, people are numbed by how far it has fallen. Even the banker who stated at the beginning of the year - when the Nikkei was above 13,000 - that the best thing that could happen to Japan would be a breach of the 10,000 line now admits that you should be careful what you wish for.

One senior foreign banker in Japan says: "What's quite striking is that before the atrocity in New York the index was managing to keep above 10,000.

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