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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: fut_trade who wrote (1616)	11/18/1998 11:12:00 AM
From: chirodoc	Respond to of 3902

deregulation is still lacking--biggest impediment! November 18, 1998 Business and Finance - Asia Domestic Successes Bolster Obuchi Ahead of His Meeting With Clinton By DAVID P. HAMILTON Staff Reporter of THE WALL STREET JOURNAL TOKYO -- To all appearances, Japanese Prime Minister Keizo Obuchi has some impressive accomplishments to present to President Clinton when the two meet here Friday. 1Japan Unveils Largest-Ever Package Aimed at Boosting Ailing Economy (Nov. 16) In just the past month, Mr. Obuchi and his ruling Liberal Democratic Party have won a trio of legislative and political victories. They have finalized a plan to pump public funds into the nation's heavily indebted banks, unveiled the government's largest-ever economic stimulus package, and deftly divided opposition forces that control the upper house of Japan's Parliament. That's not a bad month's work for a leader with approval ratings that consistently hover around 20%. It gives Mr. Obuchi something to brag about when he sits down with Mr. Clinton -- and quite possibly, a useful shield against any trade-related criticism the U.S. president might bring up. "Obuchi can say he saved the banking industry" with his 60 trillion yen ($498.75 billion) bailout package, "and that he saved the economy with the biggest stimulus package ever," says John Neuffer, a political analyst with the Mitsui Marine Research Institute. "It's going to be very difficult for Clinton to weigh in with a lot of criticism; Obuchi has a big safety blanket." Image Problems Indeed, Mr. Obuchi is in good shape with the U.S. because he has taken two of the three actions U.S. officials have long asked of Japan. With the banking plan, he has arranged to pump money into the banking system to avoid a liquidity crisis that could have global consequences. With the new stimulus plan, the government will pour more money into infrastructure projects and tax cuts in an attempt to restore domestic confidence about the economy. From the U.S. perspective, the only pressing issue Mr. Obuchi hasn't addressed is Japan's ballooning current-account surplus. Mr. Clinton is likely to press Mr. Obuchi to do more to open Japan's markets to foreign goods, sales of which have suffered because of the yen's weakening and 18 months of recession. (A weaker yen makes foreign goods more expensive in Japan.) Yet the striking thing about Mr. Obuchi's recent string of victories is how little they have helped him with the Japanese public. His image remains one of a backroom legislator with an intimate knowledge of how political machinery works, but little in the way of public charisma or fresh ideas. In fact, the backroom maneuvering by which Mr. Obuchi and the LDP have set the government agenda over the past months is reminiscent of the LDP's strong-arm tactics of old. Take, for instance, negotiations over the banking plan, during which Mr. Obuchi was forced to deal with an opposition force united behind Democratic Party leader Naoto Kan. Initially, Mr. Obuchi was conciliatory; in an unusual set of compromises, he agreed to nearly every one of Mr. Kan's proposals. But when it came time to debate the crucial bill that would allow the government to bail out banks with public funds, the opposition demanded strict conditions unacceptable to the LDP. So the party set to work and managed to peel away one member of the opposition, the New Komei Party, by agreeing to enact a controversial New Komei proposal to distribute shopping vouchers to the public as a way of stimulating consumer spending. Opposition unity collapsed, and hasn't recovered. More recently, the LDP has been courting Ichiro Ozawa, leader of the opposition Liberal Party and a former LDP member who bolted from the party in 1993. Should the LDP succeed in establishing some sort of formal cooperation with Mr. Ozawa, it would again have a shot at forming a working majority in both houses of Parliament -- effectively neutralizing the impact of the July upper-house elections, in which voters turned on the LDP en masse. Focus on Results Equally worrying to some is that Mr. Obuchi's short-term victories could prove costly to Japan in the long run. While the banking plan was welcomed as a step to ward off financial panic, Mr. Obuchi's party successfully resisted opposition attempts to impose tough conditions on banks that receive public money. As a result, there is no guarantee that bankers will use taxpayer funds to write down their bad-loan portfolios and to foreclose on deadbeat borrowers. Similarly, economists have criticized Mr. Obuchi's 23.9 trillion yen stimulus package as an exercise in missing the point. Instead of dumping more money into inefficient industries like construction, many economists argue, the government should be doing more to promote efficiency by opening the economy to competition. Some outsiders are unimpressed, too. Moody's Investors Service turned thumbs down on Japan's spending plans Tuesday, when it stripped the nation of its triple-A credit ratings for government debt and foreign-currency obligations. Noting that Japan's stimulus spending of the 1990s has yet to lead to a sustained recovery, the rating agency cited the resulting "significant deterioration" in the government's fiscal position as a leading reason for the downgrade. Moody's said its outlook for Japan remains negative.

To: fut_trade who wrote (1616)	11/18/1998 1:47:00 PM
From: Ramsey Su	Read Replies (2) \| Respond to of 3902

Peter, Japan is rather difficult to figure out right now. I emailed John Makin of AEI and he believes the yen is too high and will prolonged Japan's route to recovery. aei.org Why is the yen so high? Are you aware of any artificial support? China would like very much to take over Japan as the economic leader in Asia but reality is they have a long way to go. If Japan does not recover, Asia has no chance. The Japanese Economic Planning Agency claimed a 1999 recovery recently. I am not sure if they are aware that 1999 is only 6 weeks away. Comments anyone? Ramsey