The Nikkei news service reported today that office rents in central Tokyo fell below the previous month's level in July for the first time in almost three years.

The news service said the average monthly rent for a 3,500 square-foot office in a large commercial building in Shinjuku sank by 0.03% to the equivalent of $6 per square foot.

The decline was attributed to the rising vacancy rate at large office buildings. The news service said that with concern growing about the slowing economy, tenants are becoming increasingly reluctant to expand their offices—and some companies have postponed renewing their leases because of poor earnings.

This has the makings of another leg of recession for Japan, which is the last thing the country needs.

Although Japan has held up better than China, Korea and South Asia this summer, news of slower business and higher commercial real estate vacancies will give investors pause.

I would continue to avoid Japanese stocks for now even though the Tokyo market is down 15% this year.

U.S. Banking Crisis Deepens

Dow Jones news service reported that the head of the Federal Deposit Insurance Corp. said Tuesday that her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. (See also: "Don't Trust the Bank Bounce.")

FDIC chief Sheila Bair said the borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank. The borrowed money would be repaid once the assets of that failed bank are sold, she said. Dow The last time the FDIC borrowed funds from Treasury came at the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered.

That the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis. The FDIC said Tuesday that its "problem" list of banks at risk of failure had grown to 117 at the end of June, compared with 90 at the end of March.

Dow Jones said the FDIC's deposit insurance fund reimburses depositors who lost money in a bank failure, typically up to $100,000. The fund's balance  fell in the second quarter to $45.2 billion. That is just 1.01% of all insured deposits, low by historical standards.

The FDIC is called in when there's a run on the banks. So who is called upon when there's a run on the FDIC?