Japanese banks' performance for the first half of the current fiscal year delivers a disquieting message: They are still saddled with a large number of problem loans. For years, they have been saying that the worst is over -- and it is true that the danger of a financial meltdown no longer exists. But the banks' reports for the April-September period show that they continue to suffer in the wake of the collapse of the economic bubble a decade ago.

The bad-debt problem remains a thorn in the side of restructuring Japanese banks. Although they are trying hard to remove it, they are not making as much headway as they would like, partly for reasons beyond their control. To restore real stability to the banking system and to get Japan's economy back on its feet, the remaining debt overhang must be cleared.

In the past decade, the economy has been mired in its worst slump since the end of World War II. It all started with widespread crashes in the stock and property markets in 1990, when the speculative binge of the late 1980s -- the money game fueled by the blind faith that land prices had nowhere to go but up -- came to an abrupt end. That left banks with mountains of sour loans.