In announcing plans Monday to spend as much as $8 billion for a 20 percent stake in Morgan Stanley, Japan's biggest bank underscored just how far that nation's financial companies have come from their own economic crisis in the 1990s.
But the deal by Mitsubishi UFJ Financial Group also highlighted Asia's crucial role as the United States tries to restore health and confidence to its tottering financial system.
For years, Asian nations have financed the heavy spending of the U.S. government and American consumers by investing much of their trade surpluses in U.S. government and corporate bonds.
With huge stockpiles of foreign reserves, China, Japan and other Asian countries have the wherewithal to plow much more money into distressed American assets in the coming months. Many Asian financial institutions, which a decade ago foundered from bad lending practices and mismanagement, today look a lot better than their U.S. counterparts and appear primed to seize buying opportunities.
But Washington's plan to borrow $700 billion to finance a banking system bailout could give foreign investors pause. The dollar plunged Monday, signaling some global investors' concerns, analysts said.
The move by Tokyo-based Mitsubishi UFJ appears to be part of a previously announced strategy to expand in the U.S. Last month, it agreed to pay $3.5 billion for the 35 percent of UnionBanCal Corp., parent of San Francisco-based Union Bank, that it did not already own. Meanwhile Monday, Japan's largest brokerage company, Nomura Holdings, agreed to pony up $225 million for the Asian operations of Lehman Bros. Holdings Inc., which filed for bankruptcy protection last week.
Ahmadinejad warns against Bush's 'Logic of Force'
Iranian President Mahmoud Ahmadinejad declared Monday that the turmoil on Wall Street is rooted in part in U.S. military intervention abroad and voiced hope that the next American administration would retreat from what he called President Bush's "logic of force."
He also asserted, in an interview with the Los Angeles Times, that Israel is doomed "like an airplane that has lost its engine" and that Western intelligence documents questioning the peaceful purpose of Iran's nuclear program were crude forgeries.
The U.N. General Assembly opened its annual session Monday in a state of alarm over a global financial crisis. Secretary-General Ban Ki-moon said he feared for his effort to secure increased pledges from rich nations to aid the poorest, which are already reeling from higher food and energy prices.
Before joining the annual fall debate, Ahmadinejad sounded a provocative note on the topic during a 40-minute interview with Times editors and a reporter in a Manhattan hotel suite heavily guarded by agents of the U.S. Department of Homeland Security. Several blocks away, across from the U.N. headquarters, 3,000 demonstrators mobilized by a coalition of mostly Jewish groups protested Ahmadinejad's threats against Israel and Iran's human-rights record.
The Iranian leader wore a gray Windbreaker over a light tan shirt and a Pierre Cardin belt in gray plaid slacks. He smiled almost incessantly, even when talking about Bush, who addresses the General Assembly on Tuesday. Bush's policies, the Iranian leader said, "have harmed people all around the world."
McCain assails Obama's lack of an economic plan
With Congress considering a bailout plan for Wall Street, John McCain cast Barack Obama as indecisive in the face of the financial crisis, accusing him of resorting to partisan attacks rather than proposing concrete ideas to stabilize the economy.
McCain issued the outlines of a possible approach Friday, following an awkward period in which he made conflicting statements about whether the government should bail out major financial institutions.
In Green Bay, Wis., Obama steered clear of a detailed critique of the Bush administration's bailout proposal but called for more vigorous oversight of the financial markets to restore public confidence in Washington and Wall Street.
As the stock market swings wildly, the financial crisis poses challenges for both candidates. McCain, the Republican nominee, is recommending tighter regulations, a position at variance with his record as a free-market enthusiast. For Obama, the ailing economy is fuel for a candidacy based on an urgent call for change. A CNN poll released Monday showed that, by a 2-1 margin, voters blame Republicans for the mayhem.
McCain voiced reservations about the Bush administration's plan at a town hall in Scranton, Pa., saying he is "deeply uncomfortable" with it because the Treasury secretary would have virtually unbridled authority to determine which companies are eligible and under what circumstances. "Never before in the history of our nation has so much power and money been concentrated in the hands of one person," he said.
Photo: Courtesy of Laron Fomby
