Zeev- the following is from the SCMP- please note the Japanese opposition party proposal for gift certificates- it reminded me of your suggestion for appealing to patriotism as a means to increase consumer spending:
Tuesday October 6 1998
Japanese shares plummet to 13-year low
AGENCIES in Tokyo
Japan's crucial bank-reform bills, the centre of the financial world's attention, ran into deadlock as Tokyo's stock market fell to its worst level in almost 13 years.
Politicians, under pressure from markets and the Group of Seven (G7) leading industrialised nations to repair Japan's economy and its banks, yesterday resumed talks on fixing the banking sector and prepared fresh steps to boost growth.
Opposition legislators are steadfastly opposed to the ruling party's plans to use at least 13 trillion yen (about HK$742 billion) in public money to support struggling banks.
Tokyo share prices slumped to their lowest close since January 30, 1986, on domestic policy pessimism and disappointment the weekend G7 meeting offered no concrete plan to restore global growth.
The key Nikkei-225 Index closed down 2.08 per cent, or 275.57 points, at 12,948.12.
An opposition party member said it was hard to tell when a deal might be struck.
Meanwhile, a government source said while Prime Minister Keizo Obuchi would order the government to study fresh fiscal steps, a decision on actual content could take a month.
Mr Obuchi, who promised when he took office two months ago to restore economic growth, must today face up to an economy that is going to shrink for a second year.
The Economic Planning Agency will be announcing a revised forecast for the year after the cabinet meeting.
EPA chief Taichi Sakaiya has said gross domestic product is expected to shrink by almost 1.9 per cent, and domestic media have reported the forecast would be minus 1.8 per cent against a forecast of 1.9 per cent growth.
Mr Obuchi is expected to tell cabinet ministers to map out emergency stimulus steps after the new and gloomy forecast is unveiled, the government source said.
"Some instruction [from Mr Obuchi] is likely, although it would take about a month to discuss and decide actual content."
Cabinet secretary Hiromu Nonaka has said a planned 10 trillion yen extra budget for the year and almost seven trillion yen of promised corporate and personal income tax cuts were under review.
The trade ministry is pushing for bolder steps, including the passage of a second extra budget in an emergency parliament session in November.
But the finance ministry, worried about Japan's bulging budget deficit, is not keen to spend more, the source said.
Signs Mr Obuchi may have realised he cannot be choosy about how to bring the economy back to life emerged when he embraced a previously scorned opposition party idea of handing out gift certificates to spur consumption.
"I would like to have it considered," Mr Obuchi said.
The Komei Party has proposed handing out spending certificates worth 30,000 yen to Japan's 125 million people, arguing the result would be equivalent to a four trillion yen injection into the economy.
Finance Minister Kiichi Miyazawa said after the G7 meeting he was "not thinking about additional measures at all now", and that his counterparts had not demanded any.
Mr Miyazawa said the G7 had urged Japan to shore up its fragile banking sector through an infusion of public funds and that a 13 trillion yen fund for recapitalising banks, which ruling and opposition parties have agreed to scrap, would be replaced by one that would be at least as big, if not bigger.
Ruling and opposition parties are at odds over which banks should get public funds and what conditions should be set for using tax money.
An opposition party member said: "We might strike a deal suddenly but really, it is not easy to tell. There are differences, and they are pretty large as of today."
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