Sorry, Just noticed the LU contract was already posted. Here's something from NYTimes on Jap. They have a bunch of related articles.
By NICHOLAS D. KRISTOF
OKYO -- In a few weeks Prime Minister Ryutaro Hashimoto will face nationwide elections as he presides over the worst recession in more than 50 years, a limp stock market and the highest unemployment rate since records began to be kept.
Yet experts overwhelmingly expect his governing Liberal Democratic Party to do very well. The latest polls show it with more than five times as much support as any other party.
Now Hashimoto is more likely than ever to do well, for President Clinton handed him a political gift on Wednesday by agreeing to a joint U.S.-Japanese campaign to bolster the sagging yen. Whether the jawboning and billions of dollars in foreign-exchange intervention succeed in propping up the yen, they will almost certainly succeed in propping up Hashimoto.
Yet Hashimoto's relative popularity may be part of the problem.
The premise of Clinton's decision to go to Hashimoto's aid was that Japan would take, as Clinton put it, aggressive and bold steps that would justify a higher rate for the yen. But many analysts here say that the Japanese political process militates against fundamental change and that Hashimoto's relative popularity suggests that the public wants someone like him, a repairman for the old system rather than an architect for a new one.
To be sure, although Americans would like more, some repairs are still crucial. One that Japanese officials are focusing on would be for the banking system, and particularly the bad loans that overwhelm it.
"Fundamentally it comes down to the fact that people in Japan generally don't think that things are so bad that they need to have fundamental change," the president of the American Chamber of Commerce in Japan, Glenn S. Fukushima, said. "They realize that there are difficulties, that they need to handle them, and they are prepared to make certain changes. But change will often result in disruption of the current system, and I think that is something that people want to avoid as much as possible."
All this raises puzzling questions about the Japanese political process. In most industrialized countries there is a built-in corrective mechanism when an economy veers off course. Disgruntled voters evict the old team and choose new leaders who promise to do things differently. Yet despite eight years of economic stagnation the Japanese political system has not responded in that way.
One common explanation is that Japan has established an elaborate series of safety nets, so that even in a recession no one feels deeply distressed. Ronald A. Morse, a professor of economics and business administration at Reitaku University near Tokyo, calls Japan "an air bag society," because people are so protected from the effects of recession.
"Everybody has jobs, everybody has health care, and nobody's out on the street," Morse said. "Even companies that are losing money aren't laying people off."
Certainly Japan does not have the feel of a country in a severe downturn. There are very few homeless people, soup kitchens, bankruptcies or vacant buildings. Although there are some differences in measurements, the record unemployment rate in Japan is still 4.1 percent, less than the 4.3 rate in the United States.
An old saying defines a recession as when your neighbor is laid off. When you are laid off it is a depression. By those definitions, for the great majority of Japanese this is still not a recession.
The sliding yen had been a visible and humiliating signal of Japanese economic weakness. But for now the joint U.S.-Japanese intervention may have arrested the slide. In early Asian trading on Friday, the yen was quoted at 137.30 to the dollar, compared to 146 before the intervention. The gulf in perceptions inside and outside Japanese on the seriousness of the economic situation here is difficult to exaggerate.
To Americans and many Asians these days it sometimes seems that Japan's economy is burning and is threatening to ignite all of Asia and, perhaps, the United States and Europe, as well. For those fearing a global economic conflagration, nothing is more infuriating than the sight of Hashimoto as he passively watches the flames and seeming to do little more than blithely insisting that the fire will eventually subside.
In a similar situation Nero fiddled, but not for eight years -- that is the kind of grumbling one hears from U.S. officials these days.
To Japanese officials the foreign carping seems foolish and petulant. Some say the U.S. government is simply nervous about its own bubble economy and is looking for a scapegoat to blame when stock prices inevitably collapse. And most Japanese say the risks are exaggerated.
"The realities of Japan's economy are not as bad as the world thinks," said Jiro Ushio, chairman of the influential Japan Association of Corporate Executives.
Moreover, many Japanese insist that their country is seriously addressing the recession and the Asian crisis. They note that the Japanese government has put in place a huge stimulus package, the biggest in the nation's history, and that the government has contributed far more to Asian bailouts than the United States.
"To suggest that we might be oblivious is not, I think, well founded," said Sadaaki Numata, the chief spokesman for the Foreign Ministry.
Noting that Japan has worked out a series of measures to combat the recession, he added, "We will implement the measures as soon as possible and we do hope that there will be a recovery and that the markets will respond."
In any case, for all the bewilderment and anger at Japan's reluctance to do more to stimulate its economy, in Japan Hashimoto's behavior makes some sense and appears in keeping with the public mood. After all, he just celebrated the Liberal Democratic Party's latest victory, on Sunday in a parliamentary by-election.
That was the sixth consecutive victory in by-elections for the Liberal Democrats, and polls suggest that they will also do very well in elections for the upper house on July 12. The upper house is much less significant than the lower house, but the election will nonetheless be an important test of sentiment, and Hashimoto seems ready to pass with flying colors.
A poll this week in the Yomiuri newspaper, taken just before the intervention to support the yen, found that the support for Hashimoto's government had dipped, from 33 to 30 percent. But perhaps more important, 29 percent of those interviewed said they still supported the Liberal Democrats, compared to 5.5 percent for the leading opposition group, the Democratic Party.
The Liberal Party, which advocates precisely the far-reaching economic reorganization and stimulus policies that Washington would like to see in Japan, had the support of 1.7 percent.
There have been widespread hints that Mr. Hashimoto will be more aggressive in tackling Japan's financial problems immediately after the election. But that, too, tells something about the public mood.
Instead of promising before the election to address the economic mess and mountain of bad bank loans, the speculation is that he will tackle these issues only after he no longer has to face the voters.
Morse argues that Japan suffers from cronyism and structural economic problems quite similar to those of South Korea and Indonesia. Those countries were bailed out by the International Monetary Fund on the condition that they accept painful reorganizations.
But Japan has not collapsed in the way that South Korea or Indonesia did, so Morse said he believed that the political process would not lead to a fundamental overhaul of the economy.
"The IMF should have come into Japan, but it didn't," he said. "Japan is too big for anyone to mess with."
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Other Places of Interest on The Web
Japanese Economic Planning Agency.
Japan Economic Institute of America. |
