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Cablegate: Tokyo Media Reaction - Frb Rate Cut

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UNCLAS TOKYO 004386

SIPDIS

SIPDIS

STATE FOR I/RF, PA/PR/FPC/W, IIP/G/EA, EAP/PD, R/MR,
EAP/J, EAP/P, PM;
USTR FOR PUBLIC AFFAIRS OFFICE;
TREASURY FOR OASIA/IMI;
SECDEF FOR OASD/PA;
CP BUTLER OKINAWA FOR AREA FIELD OFFICE;
PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO JA
SUBJECT: TOKYO MEDIA REACTION - FRB RATE CUT


LEAD STORIES: All Thursday morning papers led with the
results of a Japanese government survey that showed a 1
percent rise in average commercial land prices across
the nation as of July 1 compared to a year earlier.

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1. "Drastic Measures Necessary to Resolve Subprime Loan
Problem" The liberal Mainichi editorialized (9/20):
"The US lowered its key interest rate for the first
time in almost four years.... The US has adopted an
easy-money policy as an 'emergency measure' to prevent
cash-strapped financial institutions from suffering a
credit crunch.... It is necessary for the US to take
appropriate steps to deal with the subprime loan fiasco
in order to resolve the current confusion in the
financial markets.... The FRB needs to immediately
take drastic measures to prevent the subprime loan
problem from affecting global markets."

2. "Anxiety Remains Despite Rate Cut" The liberal Tokyo
Shimbun wrote in an editorial (9/20): "...We welcome
the FRB decision to cut the federal funds rate by 0.5
point at a time when a clear message from US
authorities was needed. Markets in New York and Tokyo
reacted positively in the hope of a rise in share
prices. Although markets appear to be enjoying a
temporary respite, this is no time for complacency.
Former FRB Chairman Greenspan recently told the
European press that he would not be surprised to see a
double-digit drop in US housing prices. Current FRB
Chairman Bernanke stressed the gravity of the subprime
loan problem, saying that the vulnerability of the
housing market has continued longer than expected and
that the losses in global financial markets have also
exceeded expectations."

SCHIEFFER

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