The more the Japanese economy contracts, and the further the yen falls, the greater the pressure China's fragile economy is forced to bear. We are now told the technically bankrupt Japanese government can solve its economic problems by borrowing more money in order to give greater tax cuts. That by borrowing more money, it can increase government spending - that by borrowing more money, it can bail out the banking industry. Apparently, no one is prepared to lose anything, so an illusion has been created. Realistically, the bad loans are most likely a large multiple of this amount.
Many Japanese companies can no longer afford to even make interest payments.
And as the deflationary collapse gathers momentum, more and more companies will swept into the same rat hole. Since 1990 Japanese banks have been extending new loans to finance the operating losses of corporate Japan, wishing for a turn around in the economy. These loans are unsecured advances which will be eventually written off. These nenshos were unofficial letters stating that the company was aware that its Asian subsidiaries were borrowing money. The paper has no legal significance - and the banks are not legally protected if the loans go bad.