The Yen has been rallying on the idea that Japan is relatively under-exposed from the credit carnage, but the economy is far from insulated.
As in Europe and the US, Japan has decided it must take stakes in ailing firms:
NYT: Although it did not specify what type of companies might be eligible for such help, the plan is likely to be mainly aimed at the medium-sized firms that employ 70 per cent of the country’s work force and are key suppliers to the corporate giants.
While shrinking domestic and international demand, compounded by a strong yen, is weighing heavily on corporate icons like Sony and Toyota, it is the smaller and mid-size companies that have found it hardest to obtain lending amid the global credit crunch, and their fate has become a highly politicized issue in Japan ahead of elections later in the year.
Meanwhile, this seems like wishful thinking: “However, economists said it remained unclear how the plan would be implemented and some cautioned that it should not be used to artificially prop up non-viable companies at taxpayers’ expense…“