Japan admits negative profit rate: Doom of capital apparent 
in world's second largest economy

Japanese banks now lend in Japan at 0.1% interest, because 
no one in Japan can make a profit to make it worth 
borrowing money. For this reason, and because of past bad 
loans (also at low rates!) bank loans in Japan have shrunk 
for 41 straight months.

In any case, the real shocker is that Japan is now loaning 
money to international organizations like the European 
Investment Bank at negative 0.1%. This amounts to giving 
capital away and amounts to an acknowledgement that 
capitalism is cooked in Japan.

During World War II, Germany got itself out of a negative 
profit situation by going to war. The war destroys some 
capital and prepares a crackdown on exploited workers. This 
is the only way the capitalists can restore the profit 
rate.

The only complicating factor is that within Japan prices 
are sometimes falling, something called "deflation." Hence 
in Japan the "real" interest rate may be more positive than 
positive 0.1% may indicate. Foreigners who borrow yen, buy 
Japanese goods and then sell them for less yen a year 
later, will take an even greater loss. If however, 
borrowers borrow yen and buy something in a country with 
inflation, and then sell those goods a year later, they 
will increase their profits beyond the -0.1% interest rate 
give away the Japanese banks are giving.

Note: Barrons 4June2001, p. MW5.