The latest plan involves Japanese banks re-assessing the debt to take into account the ability of the debtor to generate sufficient income to bring its account back to order.

"The plan is fundamentally flawed," said Morris-Cotterill. "It is the bastard son of US accounting standards and analysts' opinions which gave us the dot-com boom and Enron and Japanese banking decision making which gave us one of the world's most corruption-ridden loan books. "

Morris-Cotterill says that the plan is simply switching fact for opinion and that the plan may even undermine the Tokyo stock market with the effect that would have on regional exchanges. He argues that the value of the banks' own balance sheets will be artificially enhanced and that, when the illusion is discovered by the ordinary investor, confidence in bank shares will be adversely affected. More, the conversion of debt within the corporate sector will artificially support confidence in corporations whose performance has not, in fact, improved.

"Banking decisions will be based on the opinion of accountants and analysts who have, time and time again, under US rules displayed themselves as naïve, ignorant, greedy or corrupt. We have seen the effect of just how this plays out in Enron and others and in the fact that shareholder class actions are now reaching epidemic proportions in the US," said Morris-Cotterill.