Frugal Culture May be Saving Grace for Much of Asia
Reuters in Tokyo 3 December 2008
Even after 14 years in the white-knuckle world of stock trading, Ken Masuda does not sound like a big risk-taker - at least when he talks about his own cash.
“I’m more conservative than most Americans when it comes to money,” said the 37-year-old Mr. Masuda, a Japanese trader who has spent most of his career betting on stocks for a Tokyo brokerage.
“Americans will take a loan to buy a house, and then take another loan to buy another house. That would be unthinkable in Japan. Japan is still a culture of savers.”
That frugal culture may be a saving grace for Japan and much of the rest of Asia as the global financial crisis and a worsening economy make it tougher for consumers to repay mounting debt, further straining banking systems and adding to fears of a deep and long worldwide recession. As more credit card debt, car loans and other consumer loans sour in the United States and Europe, analysts and bankers believe Asia is unlikely to feel the same squeeze, helped by conservative borrowing and a better outlook for labour markets.
Last month, the head of Bank of America Corp warned that the US credit card industry could see record losses as overstretched borrowers find it tougher to repay years of easy credit. US credit card companies may need to reduce credit limits by more than US$2 trillion in the next 18months, reckons Meredith Whitney, an analyst at Oppenheimer.
US households have accumulated an additional US$8 trillion in debt since 1998, bringing the total to US$14 trillion.
Japan’s economy is roughly one-third the size of the US economy but government data shows its outstanding consumer debt is about US$191 billion, a little more than 1 per cent of US household debt. For Japan, which boasts an estimated US$16 trillion in household savings, the push to save may be borne from a tradition of avoiding risk.
In Hong Kong, consumers are better positioned to weather the current downturn than they were a decade ago, when many were over-extended heading into the Asian financial crisis. Individuals carry less debt, and the unemployment rate, while rising, remains low by historic levels at 3.5 per cent.
The Chinese, too, are likely to be helped by a cultural aversion to taking on large amounts of debt, analysts say.
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Frugal Culture May be Saving Grace for Much of Asia
Reuters in Tokyo
3 December 2008
Even after 14 years in the white-knuckle world of stock trading, Ken Masuda does not sound like a big risk-taker - at least when he talks about his own cash.
“I’m more conservative than most Americans when it comes to money,” said the 37-year-old Mr. Masuda, a Japanese trader who has spent most of his career betting on stocks for a Tokyo brokerage.
“Americans will take a loan to buy a house, and then take another loan to buy another house. That would be unthinkable in Japan. Japan is still a culture of savers.”
That frugal culture may be a saving grace for Japan and much of the rest of Asia as the global financial crisis and a worsening economy make it tougher for consumers to repay mounting debt, further straining banking systems and adding to fears of a deep and long worldwide recession. As more credit card debt, car loans and other consumer loans sour in the United States and Europe, analysts and bankers believe Asia is unlikely to feel the same squeeze, helped by conservative borrowing and a better outlook for labour markets.
Last month, the head of Bank of America Corp warned that the US credit card industry could see record losses as overstretched borrowers find it tougher to repay years of easy credit. US credit card companies may need to reduce credit limits by more than US$2 trillion in the next 18months, reckons Meredith Whitney, an analyst at Oppenheimer.
US households have accumulated an additional US$8 trillion in debt since 1998, bringing the total to US$14 trillion.
Japan’s economy is roughly one-third the size of the US economy but government data shows its outstanding consumer debt is about US$191 billion, a little more than 1 per cent of US household debt. For Japan, which boasts an estimated US$16 trillion in household savings, the push to save may be borne from a tradition of avoiding risk.
In Hong Kong, consumers are better positioned to weather the current downturn than they were a decade ago, when many were over-extended heading into the Asian financial crisis. Individuals carry less debt, and the unemployment rate, while rising, remains low by historic levels at 3.5 per cent.
The Chinese, too, are likely to be helped by a cultural aversion to taking on large amounts of debt, analysts say.
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