Point of VIEW.

A purely analytical perception...


Continued from pg. 1

When the inevitable economic slow down hit, bankers were undismayed.  At this point in time, in spite of the fact that Japan has many high-tech factories with endless robotic workers, according the Conference Board, Japan's productivity per worker in 2001 was only 72% of that in the United States and dropping like a lead balloon.

However, it would have seemed that the bank's frustrated with output at home looked at buying business abroad. They simply exported their keiretsu generated "bubble economy" to the rest of Asia by buying their way into markets with low rates and economically imprudent loans.  Ron Chernow, writing in the Wall Street Journal[1] reported that, "Before long, the lending had assumed proportions that begged description.  From a mere $40 billion in early 1994, Japan’s Asian lending ballooned to $265 billion with $87 billion stored up in Hong Kong alone".  Bankers fought with each other to be first in line to put on the books some of the worst loans ever made by man since a Chicago Bank put the mortgage on Mrs. O’Leary’s barn the day before the Chicago Fire.  In doing so, this excess of capital overheated economies that did not have the infrastructure to absorb the vast amounts of money being thrown at them, and the countries were left with severe dislocations in their economies.  This type of lending was somewhat akin to giving firewater to the American Indians who were not only unused to the substance but were highly reactive to it as well.  It has tendency of creating a time bomb that has a tendency of exploding at the worst of all possible times.  

Japan’s insatiable bankers by making loans to people unable to effectively use the money are no less guilty of creating world chaos than the highly criticized  international lending organizations such as the World Bank and the IMF who historically have thrown money at emerging countries for projects that had been ill conceived and unnecessary.  When the smoke cleared on these loans, all that had really taken place in those instances was that the third world borrower’s despotic leadership had pocketed the majority of the funds and left the countries with depleted treasury's and a lower standard of living.  The only difference between the two is that the scars left by Japan will be "skeleton buildings" and cranes while the largesse of the World Bank and IMF are factories the don’t turn out anything and dams that have injured marine life while not producing energy[2].  Private and public sector blunders create the same type of damage, they just pick differing types of projects on which to ply havoc.  

Indications are that the Japanese economy will continue going down the tube, making the region’s loans denominated in dollars more and more expensive.  The yen will probably be forced lower in order to increase exports to make up for the lack of spending in Japan’s home market. On the other hand, if the yen  stays the same or goes up, it will more and more difficult to make repayment in the Japanese currency. Thus, the scenario for the Japanese banks is one in which you lose if you win, or you lose if you lose.  Moreover, The International Monetary Fund’s bailouts of Indonesia, Thailand and Korea has forced not only additional belt tightening, but slowed exports to these countries to a crawl.  Simultaneously, the entire Pacific Rim with their devalued currencies became tougher competition, and now it was no longer for a better life that they were striving for, it was for pure survival.  

This "doomsday spiral" has already created a quantity of under-performing loans on Japanese books unmatched in global history.  Only one question remains: Is Humpty Dumpty too big and too broken to be put together again?  It will certainly not reemerge in its present form.  In a world of economic niceties, Japan’s collapse will not particularly bring tears.  Remember, Japan occupied almost every one of these countries, and there was certainly nothing benevolent in their despotism.  We are in for some exciting times and with North Korea lobbing shells into Japan's airspace, who knows what is going to happen next?  

Slightly over a decade ago, Japans people’s belief in their own economic invincibility led them to conclude that the land under the Imperial Palace in Tokyo was worth more than the State of Florida. Japanese banks were charging negligible interest rates relative to the rest of the world at the same time Japan’s positive balance of payments produced a strong Yen, and the world had literally become a Japanese bazaar.  The country, financed by its banks, went on a purchasing and building binge that spiraled out of control.  It effected not only the global real-estate market, but the world's art market[3] as well.[4]  

But there were more than enough willing sellers around to accommodate the Japanese economic bubble. It seemed that everybody in America wanted to be the first to sell the Brooklyn Bridge to the clamoring Japanese investors, and figuratively they did just that, over and over and over again.  Probably the worst of a series of dismal Japanese investments was their purchase of Rockefeller Center.  After doing nothing but bleeding money for almost a decade, the Japanese owner walked away from a billion-dollar investment.  Or how about the Japanese investor who paid tens of millions of dollars for a Van Gogh painting and didn't even have enough money to take possession of it after the auction had ended.  

Japan’s society is totally male dominated and in this day an age, we believe that this too will take a heavy toll on the economy until they come to grips with their pre-historic thinking.  Fully one-third of the women that responded to a Japanese survey indicated that they are regularly battered by their husbands, and in spite of this, there is really little or no assistance available for them.  Japanese domestic violence has been ignored for so long that it does not look like any change is likely to come soon.  One of the reasons that this is allowed to continue is that the Japanese society is fairly "closed mouth" over domestic situations, and women not only consider it to be a loss of face that they are be abused by their husbands, but that to complain about it would be even worse.  


However, that is not the only problem, the Japanese population is rapidly aging and their social systems are fundamentally built on the family unit. Under other circumstances, this may have been alright, but over the next 50-years, it is estimated that Japan’s population will drop by as much as two-thirds. This will not allow a substantial enough tax base to provide assistance to an aged population. In the meantime, women in Japan are not normally part of the work force and without this essential element, there will not be enough workers available to maintain anything close to the status quo. Change comes hard to this region and it could also come too late.  

Life is not always easy for Japanese politicians, as people in that country are extremely traditional and abhor change for change’s sake.  The dramatic transformations that are now necessary to keep the Japanese ship afloat may require stronger medicine than the current administration is willing to prescribe.  After what is now known as a policy double reverse, Prime Minister Ryutaro Hashimoto came to the conclusion that the only solution to the current crises was to have the public bail out the Japanese banks.  The population rebelled against the fact that it was once again being asked to save an industry, which was mismanaged and basically non-competitive. The subject was so politically loaded that questions started to be raised as to whether this kind of thinking would bring down the government, but this certainly not the first time that public funds have been used to bailout inept Japanese management on the part of Government bureaucrats. It was only five years ago that the Japanese public unhappily footed the bill for the political inspired, nonsensical bailout of housing lenders in a collapse that made the American Savings and Loan Crisis look like mere child’s play.  

Infrastructure Spending

The Japanese Government had kept the economy tuned by dreaming up infrastructure projects to keep the economy humming and maintain full employment. The social cost of full employment and jobs-for-life make the social conscientious Nordic counties look like they have been left behind in a time warp.  On the other hand, while in Europe the various governments have taken on the responsibility for taking care of the people, in Japan that role is played by the corporations and families.  They are heavily subsidized to accomplish this, and this government subsidy takes the form of almost zero interest loans.  

As opposed to the Japanese population their companies have not yet learned to put their money away for a rainy day any more than the government has learned not to spend what it doesn’t have.  The government has historically relied on the knowledge that Japanese citizens are easily the largest savers on earth and that when the chips are down, the government has a very large piggy bank just waiting to be broken open.  On the other hand, with slightly freer markets becoming available to savers in the country, how long are they going to continue being satisfied with literally no return on their money in a country that doesn’t pay interest. Should funds start leaving Japan seeking greener  pastures, the money that bureaucrats have been counting on for a rainy day may no long be available.  

As we have pointed out, the huge infrastructure developments undertaken in Japan are a direct function of their theory of full employment.  In spite of the logic that the day when all of the accounts have to be settled may be just around the corner, government officials continue to believe that anything less than full employment will cause people to lose faith in their country, cause the public to even spend less than they are now creating a depression and causing the government itself to fall.  Thus, for the foreseeable future and in spite of statements to the contrary, nothing dramatic is going to change in Japan.  In addition, there is a growing demand by war prisoners, women and various countries in the region that were pillaged by the Japanese during World War II, demanding reparations. The Japanese may be able to stonewall this eventuality for a tad longer, but then the roof is going to fall in. Japan has done little in the region from both a psychological or financial to undo the harm caused by their aggressions and mistreatment of prisoners during the Second World War.  

While the projects that the Japanese construct are world class and the envy of anyone that has not taken the time to do the arithmetic, the price will ultimately have to be paid.  Our figures indicate that bad debts in Japanese banks have soared to over $600 billion, and when the recent new additions to the red ink from the Pacific Rim debacle is factored into the equation, our adding machine starts overheating.  But what really sticks in the public’s craw is the ongoing bailout of the Japanese National Railways.  This problem has been amortized over 63 years, and as such will simmer in the public’s mind as it continues; with the ultimate amount probably surpassing Japanese bank bad debts.  The Japanese National Railways, when they went defunct left the public holding a 28 trillion Yen liability, but in spite of this fact, the politicians are proposing new lines for the bullet train while not having a clue on how to pay for those that are already in place and losing massive amounts of money. These projects make America’s disastrous Amtrak look like a profit making business.   

Looking back at history, we find that during periods when slavery existed on earth, it was a rather simple matter to create massive projects.  These people put in double time and worked weekends as well and you only had to give them three squares a day or less.  That is, if they lived long enough to get them.  In effect, old time despots were able to take on the construction projects that they did was because the had literally no labor cost and in their spare time the slaves grew their own food.  There were no social services and if the slave died, he died.  There was no insurance to pay, no HMOs to deal with and no costly medicines to provide.  Beyond that, the people didn’t have a lot of television to watch in those days and there day consisted of carrying rocks from here to there, under the hostile gaze of a brutish superintendent that carried an oversize whip.  

For-Profit Government Project

In another misadventure, it seems that it is possible in Japan for a municipal body to acquire an interest in a for-profit venture. The New York Times reports that there are 6,794 of these, what they call third sector companies. Of these strange anomalies, seven out of ten are overburdened with debt. An abnormally high number of “third sector” investments have been made by local governments in the theme parks. The New York Times studied 30 of these parks and found that 16 were technically insolvent. The theme park concept made a lot of sense for the Japanese; they were working to hard and relaxing too little. Having a local theme park was an excellent diversion for them.  

However, it soon became evident that the themes thought up by the local governments were perplexing at best with each seemingly competing with the others to come up with formats that are more egregious. Additionally, even in some of those parks that were successful, the government people didn’t realize that it hadn’t planed for the “continuous capital investment to update attractions that was necessary to keep visitors hooked, they saw them as a one-time project like a new airport or highway. As a result, attendance generally dwindled rapidly after the first year or two of operation.”[5]  No one seemed to pay any attention to the problem until recently when Phoenix Resort, a theme park that had actually created a huge artificial beach complete with retractable dome) went under and the amount of debt that they had been carrying turned out to be literally staggering. Because of this incident, a closer look was taken at the third sector and the conclusions were that it is at best run, in a fiscal sense, every bit a poorly as badly as is the Japanese Government itself and represents an additional whole in the Japanese system that had been overlooked to this point.  

The Result of a Combination of Bad Deals

On February 23, 2001, Standard and Poors lowered Japan’s domestic and foreign credit rating indicating that the large rating service had just about given up any thoughts of a Japanese recovery any time soon. “S&P cut its long-term and foreign debt rating for Japan to double-A-plus from triple-A, citing Japan’s diminished fiscal flexibility due to budgetary constraints. rising debt levels and a slow effort to reform the economy.”[6] In the midst of this development, the Japanese stock market traded below the prices that had been established during their financial panic in October of 1998, a new low since November 20, 1985. It is noteworthy to point out that in the same period, the Dow Jones has risen over 700%.  

“Yet pressure is mounting on manufacturers. The Japan Iron and Steel Federation reported that the country’s steel exports plunged 12% in December from a year earlier. Shipments to the slowing U.S. fell 19%. Equally troubling, steel sales dropped in three key Asian markets - South Korea, Taiwan and Thailand. Exports were also weak for four of Japan’s five biggest carmakers, including Toyota Motor Corporation and Honda Motor Corporation. Shipments overseas by Toyota, one of the country’s largest exporters, fell 7.6% in January from a year earlier, while Honda’s plummeted 21.8%.”[7]  

A Discount To Reality?

Japan’s yardstick for securities prices, the Nikkei 225 index is down 65% from its record high recorded during the Reagan Administration in January of 1990. Naturally, when you account for the fact that inflation has also taken its toll during that period, also has played havoc with disposable income in Japan. Many Japanese after getting beat up for a time in the stock market took their money out and put it into various savings accounts. While they didn’t loss anything, interest rates in Japan are about as close to zero as you can get, so they took the inflation hit anyway.  

We often discuss the idea that stock prices will eventually track the performance of their underlying companies. If true, this must mean Japan’s companies are, for lack of a more delicate term, big freaking disasters. As it turns out, they are: According to noted economist Martin Wolf, in 1998 the accounting book value for public Japanese companies was 6.5 times higher than their aggregate market values. To translate, the market treats companies in Japan as if they are mass destructors of capital, not creators.” ([8])  

However, while we were never aware of those statistics, we would give another, more ominous slant to why the Japanese stocks are selling at such incredible discounts to book. The Japanese are not fools, if any legitimate company in that country could be acquired at 15% of book value, the line would be forming around the block. Getting brand names and an entre into Japan in most cases would be worth a substantial premium, not discount to almost any non-Japanese multinational. Thus, we believe that another, more plausible reason for these gigantic discounts, may simply be the fact that in Japan, GAAP means something totally different in Japan than it means in the United States, we suggest that the definition may well be Government Accepted Accounting Pretense.  The government has allowed both Japanese companies and lenders; extensive latitude on what assets may be included on their balance sheets. Companies that have gone bankrupt many years ago are still carried original cost by both industries. The continuing hoax permeates a corrupt economic system.  

“Japan’s banks have been selling off their stock market assets in advance of the end of the fiscal year, at which time - for the first time - their equity holdings will be carried at their market value. This will pull just one of the myriad veils away from Japanese corporate accounting: Investors will see the devastating losses in principal these banks have endured and how many working-dead companies’ stocks the banks have relied upon in order to make their balance sheets seem less like a train wreck. At least one big company, Toyota Motor is using this opportunity to buy back more than $2 billion of its stock from banks, a good move for its shareholders…Lack of accountability has allowed Japanese companies to continue to invest their retained earning - which represent only 7% of the operating surplus in Japan, as opposed to 33% for U.S. companies - into low-return investments rather than paying it back to shareholders in the form of a dividend. This is a problem that today exists only for the worst of American companies, many of which have developed the debt problems of their Japanese counterparts, yet have continued to provide returns on retained capital.” ([9])  

On the other hand, there are always opportunities available for those looking between the cracks in under the worst of conditions. In order to prop up the Japanese economy, the government has done everything but give money away. However,  they are in the process of driving down rates even further, thus letting people have temporary use of the money for nothing. It is probably cheaper now to borrow money in Japan along with hedging the currency risk then it is for the multinationals to borrow in their own countries.  “Bankers say that by borrowing yen from Japanese investors, countries including Croatia, Uruguay and Brazil ([10]) - and companies such as Deutsche Telekom AG - are saving as much as several percentage points in borrowing costs. That is even accounting for the expenses of converting those yen into other currencies, and of hedging against the risk that the yen will appreciate sharply and thus make the debt more expensive to repay.” ([11])   

Although this all seems innocent enough, the buyers were almost entirely made up of people taking their money of their postal savings accounts. Keep in mind that because Japan was a closed country for so many years, the investing public was limited to Japanese instruments.  Now, as the product line becomes more diverse, there are many more opportunities for the public to chose. One of the biggest assets that Japan had was the fact that it had the highest savings rate in the world and all of that money was held by the government. This in turn allowed the government to take on projects, such as their bullet train, which they probably never would have contemplated under other conditions. As the money in the postal savings accounts dwindles, Japan will become much more restricted as to it its fiscal options.  

A Changing Economy

Japanese consumers are dramatically changing their ways and all indications point to the fact that if the quality of the product is competitive, branding is no longer considered significant. Thus, as China continues to ramp up increasingly competitive products, the Japanese are flocking to their goods. Exacerbating that trend is the fact that China is now the manufacturer of choice in the Pacific Rim and numerous Japanese corporations have moved their production facilities to the Mainland with the result that Chinese exports to Japan have recently shown a dramatic increase. Last year two dramatic milestones were reached for Japan, they imported more product from China and the rest of the Pacific Rim than they did from a combination of North America and Western Europe. Their negative balance of payments with China was $25 billion and mushrooming.  China’s entry into the WTO will make these numbers even worse as trade between the country’s become even easier and more of Japanese production relocates.

Japan seemed hopelessly mired in tradition and incapable of doing anything constructive about its increasingly hopeless banking situation. That, at least  was the situation until April of 1999 when they launched the Resolution and Collection Corporation. (RCC) You probably don't need a crystal ball to figure out what that is. It attempted to be a nearly carbon copy of our own Resolution Trust Company and the purpose is much the same. The government backed agency would  buy the non-performing assets of the Japanese banks and then attempt to package the assets (for the most part raw land) in salable form and either securitize them or sell them outright. However, the RCC is basically only a collection, conglomerator and selling agency without any guarantee not to hold the banks ultimately responsible for their bad loans. 

Thus, the only thing that this agency is accomplishing is that they are temporarily transferring a bad debt from an institution that has an incentive to make it performing or get a at least try to good price for it, to a new unproven agency with literally no experience in liquidations and overall background in hopelessly bureaucratic management. Effectively, the RCC could sell off assets of a bank on a helter skelter basis and not even look back to see if they are getting a good price and charge the bank with the difference. At the time that RCC was created, real estate prices in Japan had fallen for their eight consecutive years. As we write this, they have reached the decade mark without looking back and the RCC has accomplished little and less is being predicted for this hopelessly ill-conceived bureaucratic nightmare of an organization in the future. 

Scholastically Speaking

Japan’s archaic school system has not helped the country out of its economic morass and it looks like a change is going to be forthcoming. The long hours and dreary classes have literally created a society of robots that seem to be great a following orders and performing routine tasks but hard put to innovate. Many have said that Japanese scholastic system tends to drain the innovation out the people before they have finished high school. While the system worked to perfection after the end of World War II when the country was rebuilding, Japan is now a sophisticated society that requires unique thinking to help it retain its position as a global economic leader. The change in a flawed system is coming rather late in the day and the results if any will not be felt for years to come, probably too late to have any definitive effect on today’s problems.  

Moreover, when an entire economy is taught to obey "big brother;" without even giving his instructions a second thought, there is little question that you are removing the inspiration that creates invention from the entire system. While this has shown to be catastrophic relative to the ability for the Japanese to create as opposed to copy when it comes to innovative technologies, when you start creating from an incorrect referent and then build that into an already flawed system, you are creating and almost suicidal influence that is building on a foundation that is not technically able to withstand shocks.  Japan, already stuck with the highest suicide rate in the civilized world, now has taken to changing their textbooks to assuage the people's sensitivities relative to what the country's World War II history was really like.  They have now changed their books to include a history as they would like it to have been and not what reality has shown it to be. Just like in Japan's hopelessly flawed banking system, society in that country has chosen the route of burying their heads in the sand rather than deal with reality. Now they are playing that kind of game with the education system, guaranteeing their eventual conversion to a third rate country.

However, they have found constructive change close to impossible for other reasons:

“Japan has been floundering economically for more than a decade, and the change is meant in the part to help ensure the country’s ability to compete. Somewhat paradoxically, the drive to give millions of students more electives and unstructured time out of school for their personal use comes as public anxiety over dropouts, adolescent crime and what is perceived here as an epidemic of underachievement among the young is higher than ever.” [12]  

On Thursday, March 8, 2001, Kiichi Miyazawa said it like it is, the Japanese Government’s finances were close to a “catastrophic situation.”  People, especially high-ranking officials just do not talk that way in Japan and when some skeptics raised the question of whether he just was trying to drive down the price of the yen, he adamantly denied it. Mr. Miyazawa’s statements were echoed by Masaru Hayami, the governor of the Bank of Japan who in a speech to the Japanese Parliament indicated that “We should look squarely at the reasons whey we could not make the economic recovery a certainty, despite the full measure of financial and fiscal measures we took in the last 10-years.” The New York Times noted that the Bank was on a charm offensive trying to mend all of the fences that they had broken over recent years. The times also indicated that the consensus thinking was that a zero-interest rate would be restored soon in Japan.  

Playing the China Card

In another ominous but business-wise, a strangely encouraging sign, Aiwa, a major Japanese electronics producer that is owned by Sony, has bit the “made in Japan” bullet. They are committed to do a restructuring which includes the closing of eight of their nine factories; they are going to cut their workforce by 50% and then Aiwa is going to farm out the great majority of their production to China and other low cost producing countries in Asia. This flies in the face of Japan's love affair with mono-zukuri, what you might call their made in Japan syndrome. Sony one of Japan's most profitable and flexible companies found that they were not even coming close to making the same margins that American similarly situated corporations were bringing in and although not happy with what they had to do, found that there was no choice. 

As a matter of fact, Sony found that American competitors were making more that triple what Sony was bringing to the bottom line relative to an earnings to assets employed ratio. A close look at the situation brought to light the fact that Japanese companies were not as good as previously believed at utilizing the assets that they had at their disposal. This concept of moving production to another country under someone elses control would have been inconceivable only a few years earlier. Historically, the Japanese had always preferred to control their production so that they could keep workers happily employed while maintaining strict quality controls. However, while this had done wonders for maintaining a standard of high quality products, as Japan’s labor force became more affluent, hourly wages ate deeper and deeper into profit margins until ultimately, Japan’s companies were becoming less competitive as labor and raw material costs took a deeper bite of profits.  

While Japanese industrial companies have manufactured products in plants all over the world, this development will mark the first time that a substantive effort by a major Japanese company to allow their production to be handled by non-Japanese owned factories is taking place. This move transforms the cradle to grave theory that has permeated Japanese society for generations into a cocked hat. Other companies in the same industry will have to follow Aiwa’s example if they want to continue to be able to competitively sell their products. This in turn will lead to substantial dislocations within Japan’s blue and gray collar communities. Obviously, unless Japan is able to give a substantial shot in the arm to their service industries as has occurred in the United States, the unemployment outlook is going to go from good to glum in about a year as everyone starts to play their game of catch-up with Aiwa. Within a short period, Aiwa expects sales to drop by a third as the company focuses on its more profitable lines.  

Having bitten the bullet relative to out of the country sourcing, Sony then did something even more out of the ordinary. They sold one of their plants located in Japan to an American company, Solectron Corporation and then gave them the contract to continue making the same items in that plant under the Sony logo. This, as far as anyone could tell had not ever been done in Japan either. While this action may not have been as harsh as moving the Aiwa facilities to China and having to lay off a substantial number of workers, it is unique for Japan. In addition, Solectron which specializes in mass producing electrical gadgets of all kinds is not offering the workers a lifetime contract or many of the other benefits that Sony had provided. In spite of a lot of grousing, many are happy that the plant is staying put in spite of the contraction of benefits. Japan is changing but it is not coming at a very rapid pace but the layoffs are just around the corner and the country's very survival is at stake. 

Death and Taxes

As movement from manufacturing in Japan gathers speed, indigenous tax paying entities must be protected at any cost in order to support the system. This critical order of importance places the Japan's Finance Ministry at the head of the class when it comes to making decision relative to importance of the people's health or the government's ability to collect taxes. The largest taxpayer in Japan is the tobacco industry which is situated about where the industry was in the United States a generation ago.  The government knew that smoking was bad but had not as yet determined what to do about it. However, in Japan things are a bit different. If the normally healthy Japanese have any weakness, it is their excessive smoking habits. Because of the fact that tobacco contributes so much to the government's coffers, approximately $18 billion per year, the is a conscientious effort by the powerful finance ministry to play down smoking's hazards to one's health. 

However, Japan has made the concession of labeling cigarettes but their effort  has little bite. They went with the simplistic statement, "Since smoking might injure your health, let's be careful not to smoke too much."  It seems that the best the finance ministry is willing to do relative to helping cut down on Japan's massive smoking habit (it ranks fourth in the world per capita coming right after South Korea, China and Russia) is to gradually raise taxes on the product. This rise is delicately balanced so that the amount of money collected in tax revenues stays the same in spite of many people giving up the habit because of the increased cost.  Japan just cannot afford to allow any area that is paying big taxes to falter, their national debt is literally uncontrollably high and if it comes to the question of the health of the people or the survival of the empire, there is little question about what the decision will be.  

Japan has made more than their share of mistakes but it certainly doesn’t appear like a nation that is going to sink into the sea any time very soon. A few interesting statistics can rapidly put things in perspective. The United States economy accounted for 31.5% of the global economy, Japan 14.5% and Germany 6%. The European Union as a whole accounts for twenty-five percent. George Melloan reported in the New York Times of February 13, 2000, that the Japanese GDP fell 2.4% in the third quarter of 2000 from the year earlier and Prime Minister Yoshior Mori’s government has now seen its approval-rating drop to 14%. We believe that if Attila the Hun was coming into office in Japan he would have arrived with substantially higher numbers than that in spite of his pillaging, murdering and raping. We are not sure what that says about the chances of Mori’s government surviving for any great period of time.  

Another Party Heard From

In the meantime, another force has raised its ugly head in Japan, hard core nationalism, the far-right, ultraconservatives or something similar is being preached as the gospel by a growing number of people who are asking, why is Japan the only country which tells it children what terrible things it did during World War II? Why is it the only country that has agreed not to employ an offensive army? Why did it take so long for the government to legalize the country’s flag and its anthem? These folks question whether or not the United States started the war with Japan in 1941, they are certain the rape of Nanking never took place and the Chinese made the whole thing up and they are positive that the Taiwanese comfort women were throwing themselves at the manly Japanese soldiers because they were so handsome, not because they had been sold into white-slavery. 

These revisionists are absolutely positive that the infamous “unit 731” of the Japanese army did not really experiment with chemical weapons on live prisoners; they say that Japanese do not do those kind of things, which for them seems to be comment enough. Many of those people that had their lives destroyed by "unit 731" have become incensed by the country's willingness to relegate these facts to history's garbage can. Moreover, the group was able to induce the Japanese Government to get out of the factual history writing business, they believed that they had people, more familiar with the truth and that were highly qualified scholars that could a much better job. These were people who are intimately familiar with all of the falsehoods being spread about Japanese wartime misdeeds and they will soon be rewriting history to more accurately reflect the circumstances that actually took place during the Second World War. This sounded like interesting news to the Government and enabling legislation was passed that literally gave a green light to Japan having and new and better history. It didn’t take long before a new primer was in the works which dramatically altered reality.  A spokesperson for China had the following comment:

       "The Chinese government seriously regrets the decision of the Japanese government, and expresses its strong indignation. We have made very serious diplomatic representations." 

The Korean Government began serious discussions of having the Japanese ambassador booted out of the country and people in the streets began rioting. Korea was colonized and controlled by Japan from 1910 through the end of World War II and its people were for the most part treated as slaves. 

 While this scenario is certainly going to make some nave Japanese feel a lot better, it is certainly not going to make them any friends in the rest of Asia. We would only hope that someone gags these boisterous folks before they really cause some trouble in the neighborhood. There is hardly any question that this neo-fascist group isn’t going to get the Land of the Rising Sun into deeper trouble with their neighbors than there already are. See if you have the guts to tell the wacko running North Korea that the Japanese ruler’s of that country were benevolent and only spread happiness and joy when they ruled his country and he will be demanding $20 billion in war reparations instead of $10 billion he is now asking, and for good measure, he will probably deliver a couple of international ballistic missiles loaded with atomic bombs right unto their laps revisionist laps. He is already using the Sea of Japan as a missile testing range and it could be that one of these well aimed shells takes a wrong turn and land on downtown Tokyo one day.  

This is the pleasant soul that whose father had Japanese citizens kidnapped.

             "In court, Meguni Yao, the former wife of a Japanese leftist, said that when the coupled lived in North Korea during the 1980's she tried to lure lonely Japanese students, some of them studying abroad, to North Korea. There they were to either join a government-supported "Japan Revolutionary Village" or to train North Korean spies for work in Japan. Ms. Yao said that in 1983 she lured one woman, Keiko Arimoto, then 23, from London, where she was studying English. Once in Pyongyang, the North Korean capita, she was forced to marry a Japanese man who had also been lured there. On Saturday, Ms. Arimoto' s parents said that Ms. Yao had told them that she had also lured two other Japanese women to North Korea. "I am responsible for destroying the life of Arimoto, Ms. Yao now 46, said in court. " I have brought tremendous pain on her as well as her parents. I did something unforgivable for a human being.

               "The Japanese police say they have 13 cases of Japanese citizens who are presumed to have been abducted to North Korea. At a human rights conference here last month, advocates said they knew of 73 cases...For a while, North Korea's Red Cross Society said it was searching for the missing Japanese, a search it angrily abandoned after the police arrested officers of the North Korean-affiliated bank here (Tokyo) on embezzlement charges. " The New York Times, March 21,,2002 James Brooke.

To tell the Chinese that the Rape of Nanking did not happen and that 150,000 people weren't slaughtered in 1937 is going to go over like a lead balloon. China, getting advance notice of what the new Japanese history is going to recount has already voiced its dissatisfaction. Moreover, to tell the Chinese, the Taiwanese and the Koreans the concoction now in Japanese school-books that their women chased the extraordinarily macho Japanese soldiers until they couldn’t run from them anymore, could literally lead to armed conflict. ([13]) “All told, Japan recruited as many as 200,000 women from China, Korea, the Philippines and Taiwan to provide sexual services for its military. Some were openly rounded up and pressed into service, others were deceived with offers of jobs as housemaids.” ([14]) Moreover, the Japanese illiterate went on to say that the people that say they were gassed by Japanese chemical unit “731” are dreaming and that it just did not happen is akin to Hitler’s “Big Lie” theory, the more outrageous the story is, the more people will somehow believe it.

Not only were the books being revised to reflect a more "Alice in Wonderland" type history, but Japan's then popular Prime Minster Junichiro Koizumi, took the game of "in your face" one step further by visiting the Shinto shrine in Tokyo that contains the bodies of 14 people declared by the international community as Class-A criminals for their role in atrocities in World War II. Most likely, Koizumi was trying to restore some sense of self-righteousness into the Japanese psyche that has a self-esteem lower than a cockroach's belly. However, in pulling out all these stops, he may just have sent the wrong message.

And Koizumi was not about to apologize to anyone, when asked about these these changes and whether or not more would take place he said, "Since we have adjusted them a lot, I don't think we will do more."  It seems that the Japanese attempt to change history is now at the stage where they are satisfied with the results.   

It is interesting to note that poor business cycles often bring out the loony element in a country.   Certain Hitler’s rise to power was a direct result of the business slowdown in Germany after World War I. The same thing could be said about Napoleon. People in trouble tend to look for short-term solutions and they often find that they wind up with something far worse than when they started. If these book burners and history tinkerers get the upper hand, look for Japan lose any chance at all of once again becoming a real world economic power. From that point on, we would look for Japan to soon become an unimportant, decimated province of China. 

Many of you have noticed the fact that  over the years Germany has been paying war reparations to just about everyone they defiled during World War II and surprisingly, Japan has yet to pay a penny, at least to Americans. For better or worse, this was the work of American bureaucrat, John Foster Dulles who strongly believed that heavy reparations tend to mire recovering economies in eternal gunk and that this type of penalty was in particularity, the cause of Hitler's rise.

War Reparations

After World War II ended, Dulles lobbied for and eventually created what became known as the San Francisco Treaty and then merrily went about collecting signatures from other nations that would cause them to agree never to bring the subject of war reparations up again, at least where Japan was concerned. However, in spite of all his efforts, Korea, India, China and Russia could not be pushed into the signing of what they believed was a faulty agreement. It was beyond their comprehension that the Americans would allow Japan to get away with Pearl Harbor and the rest.

And not only did it play poorly in the East, but other countries that were directly involved in that conflict were equally hostile to the memoranda. Particularly, The Netherlands did not want to sign the document because some many of their people had been tortured and deprived of their personal property primarily in the East Indies. At that time, Dulles considered, the Dutch an important cog in the agreement and unless they went along with the agreement, Dulles was certain  that the United Kingdom, New Zealand and Australia would drop out as well, making the agreement almost useless.

However, Dulles was a politician and being  of that inclination, he  worked around the problem using some very strange methods. Only days before the San Francisco Treaty had to be signed, he orchestrated a series of "off the record" letters between Dirk Sitkker, the Dutch minister of foreign affairs and Japan's prime minister, Shigeru Yoshida which stated: "the Government of Japan does not consider that the Government of the Netherlands by signing the Treaty has itself expropriated the private claims of its nations so that, as a consequence thereof, after the Treaty comes into force these claims would be non-existent." Dulles had hosed most of the world and the Dutch could now get their reparations. Moreover, In 1956, the Japanese reluctantly paid the Netherlands, $10 million while "expressing sympathy and regret." However, even then, the Japanese were tight with the dollar, they yelled to high heaven that they shouldn't have to pay anything and brought out their Magna Carta, Dulles's Treaty of San Francisco to prove their position.

The United States became incensed over the Japanese position and their officials were strongly reminded at the very highest government levels that the Dutch had earned a pass. The comments that were discreetly passed to the Japanese were on the order of reminding them that , considerable pressure had been exerted to get the Netherlands to sign and that the "Yoshida-Stikker letter would be be honored."  This caused the Japanese to cough-up the money. Inherent in the threat was the fact that if the Japanese didn't honor the agreement, that the United States may not feel that it had to either. This convinced the intransigent Japanese that they were barking up the wrong tree. However, Switzerland and Burma who were never signatories to the document both collected healthy amount of money.

However, in 1995 a $440 million lawsuit was filed by seven plaintiffs at the behest of various groups of people in the United States, Australia, New Zealand and Britain damaged by the Japanese during the war. The number of people in these classes was over 20,000. In 2000, a lower court finally determined that the suit had no merit and dismissed it out of hand. The plaintiffs appealed to the Tokyo High Court and lost once again. Now, over 55-years after the end of World War II, the case has wound its way into the Supreme Court of Japan.

However, the Tokyo High Court has already set the stage for Japanese Justice by calling the wording of the San Francisco Treaty to bear on the issue and claiming that this is an issue among countries, not among people. Japan has made one break with their wall of silence, Judge Kengo Iishii, of the High Court did indicate that testimony would be allowed from former prisoners detailing their physical and psychological suffering. A lot of good that's going to do when these folks aren't going to cough up anything anyway.

The fact that Japan violated every international law on the books by making POWs do back breaking labor under the most physically demanding conditions seems to have nothing to do with the matter. Interestingly enough, twenty-seven percent of all prisoners of war held by the Japanese died while only four percent of the prisoners held by the allies suffered the same fate. This speaks volumes.

However, this frustrating battle of the imposingly, narrow minded Japanese court rooms may hold some minor notes of optimism but only in special cases. In a case brought by Wang Xuan, a Chinese national and now a Japanese resident who original was born in the poverty stricken rural Chinese town of Yiwu there are some most unusual twists. This is the city where Ms. Wang claimed that when she was growing up, "there was not a single book in the whole village" and it is the same place where in 1942, the Japanese Unit 731 dropped plague-infected fleas from aircraft. She and other fellow claimants argue  that the Japanese killed 300,000 Chinese at that time by using germ warfare. And she made some modest progress when Judge Kohi Iwata of the Tokyo District Court ruled that the Unit "used bacteriological weapons under the order of the imperial Japanese Army's headquarters." This is quite an admission considering the fact that the Japanese government continues to deny that biological agents were ever induced into the war.

However, Wang's victory was made phyrric by the judge's additional ruling that compensation was not suitable under international law.  However, the oddity of the case is the fact that Wang married a major athlete and based on his skills, they were able to get a visa and move to Japan. She learned Japanese and began teaching at a language school. As a Japanese resident she was able not only to put together nearly 200 survivors of the attempted genocide but to get the matter on the Japanese court calendar. This case of what the Chinese called "biologically transmitted rat's disease" continues to wind its way through the court system aided inexorably by Ms. Wang's energies and residency status in Japan. However, if it were not for being treated as a inferior in that country she may never have felt the need for justice. The reason she gives for starting her pilgrimage is "If Japanese society had been more accepting and open to Chinese women, I might never have gotten involved, but this place that had been devoid of meaning for me suddenly made sense."  This is one tough cookie and the Japanese may yet rue the day that she got her green card.

 However the outcome of Ms. Wang's case, the documents behind the strange deal made at San Francisco could have well remain forever sealed but the contents and the stories behind the agreement continued to leak out, some by the Japanese themselves in their court action. This is the reason that war-veterans in the United States who had suffered grievous torture in the Japanese concentration camps have not been able to collect a penny and in addition is the reason, not understood until now that American State Department filed briefs in California court on the side of the our World War II enemies against the soldiers and sailors of this country. Japan ought to begin to understand the nuances of these agreements before the roof falls in on them. They are shaking the foundations.

Russia Knows How to Deal With Sticky Matters

Russia has had its own way of dealing with these types of issues. They came by their reparations without straining very much. Russia seized the Kurile Islands, which lie just off of Hokkaido, Japan's northern most territory,  from them in the very waning days of World War II. Japan has been attempting to recover their property ever since that time, but Russia is quick to point out that they are still literally at war with Japan and they can sick the subject in their ears. You see, Russia has never signed a peace treaty with Japan as they are probably still smarting having been handily wiped by the Japanese in 1910.

However, holding on to the Islands is not enough reparations for the Russian's, they want even more of a pound of flesh. You see, there is excellent fishing off of these Islands. Russia recently granted licenses to South Korea, North Korea and would you believe the Ukraine to fish here to their heart's content. This act has made the Japanese go ballistic, but short of war with Russia, there is not a thing they can do about.  The Japanese attempted to threaten but had no cards. "If we leave the current state as it is, it will have serious negative effects not only on the peace treaty negotiations but overall Japan and Russia relations," said a letter from the Japanese Prime Minister, Mr. Junichiro Koizumi to Mr. Putin personally.

Nationalism Has Its Limitations

Newly elected Japanese Prime Minister Junichiro Kkoizumi has added fuel to the fire by indicating that indirectly it is the Americans that are the cause for all of Japan's problems in recent years. He has attempted to convince the people that it was the Japanese Constitution that was foisted on the country in 1946 by Macarthur that is to blame for Japan's problems and its change will allow the country to take their rightful place in the international community.  Fundamentally, Japan's Constitution calls for pacifism, something that over the years has pervaded Japanese society and has literally become a way of life. 

In addition, the constitution is now being blamed for economic stagnation, unemployment, inequitable distribution of wealth and wasteful public works projects. What Japan's Constitution has to do with these problems which were unquestionably caused by flawed Japanese economic thinking and the allowance of these problems to continue to simmer rather than have the government look for cures that are to blame. However in all things, there must be some scapegoat and rather than accept the blame for the sorry state of affairs in Japan, the new Prime Minister has like his predecessors chosen to find fault with the messenger and not the problem. However, while they have chosen not to rock the boat, koizumi looks like he is about to tip it over completely. 

However, it wasn't too far in the new administration's reign when Mokiko Tanaka, the country's new foreign minister was caught allowing her agency to spend the substantial amounts of taxpayer's money on personal niceties such as dolls and household utensils. When caught red-handed the explanation was explained away in typical bureaucratic fashion. The agency had not yet spent all of the money allocated in the budget and "it would have been such a shame to waste it". When that excused didn't fly very well they came up with another lame idea, "the purchases were gifts to be presented on overseas trips." Interestingly enough a good part of the spending occurred on the very last day of the fiscal year and at an upscale Tokyo department store, Mitsukoshi. FT.Com reports that; "Other inquiries have shown that some ministry staff have used money for hotel suites, racehorses, mistresses, travel and flats...The history of the foreign ministry points to the likelihood of another scandal emerging. The potential for scandal to erupt was demonstrated by an internal investigation, which discovered that 71 or the ministry's 119 divisions were involved in a fund-pooling scam unearthed last December and that about 2,000 of its 5,000 bureaucrats were implicated"

Two months later, Koichi Kato was forced to resign after an income tax evasion case struck close to home. It was hoped that this would be the end of scandals at least for the prime minister to grab some breathing room. However, not to let the sleeping dogs lie, it was only several months later that Yutaka Inoue a member of the prime minister's party resigned when faced with bribery charges. The source of the substantial bribe was a construction company that later went belly-up. Shortly thereafter, Muneo Suzuki's secretary was arrested along with six others on a big rigging plot. Suzuki is another member of ruling party, the Liberal Democrats (LDP). Historically in Japan, secretaries are bag-men for their bosses and it is generally assumed that they do not act on their own volition.

The Return of the Conservatives

There seems little question that the Japan of the future under this administration will have a much more military bent and that the constitution will eventually be revised to take out or change Article 9 which renounces the "threat or use of force as a means of settling international disputes." Japan had become so pacifistic that its defense forces were obligated to wait a substantial period of time when the Kobe earthquake hit so that they could get civilian permission to assist victims.  Furthermore in an all new makeover, Koizumi will soon attempt to re-establish the emperor as the chief of state instead of his being a continuing symbol (shocho). However, while Koizumi brings a new and younger face to an office that has watched as Japan has crumbled in the last decade he has also espoused insanities that could eventually destroy that country as we know it today. 

It was none other than Koizumi that sanctioned the rewriting of history textbooks books in Japan that have now managed to totally pervert history and it was Koizumi who announced that he will soon visit the Yasukumi Shrine, because of the fact that the Shrine is the burial ground of Hideki Tojo and others like him, it is an act heretofore considered off limits to Japanese Officials.  It is that Shrine where the leading Japanese war criminals are enshrined including the Kamikaze pilots that attempted to destroy the American Navy and the remains of seven Japanese war criminals that were executed for their activities. It is believed that whoever died in World War II,  almost 2 1/2 million soldiers at least have their spirits represented here. While his proposed action haven't gotten the publicity that neo-Nazism has in Germany and Austria, Koizumi's intentions appear to be far more serious. However, in reality Yasukuni is a heavy duty place having been founded in 1869 and represents the focal point of the country's nationalism. 

While Koizumi may believe that strong and unusual leadership may be far better than what has transpired in the immediate past, he is doing nothing to solve any of Japan's real problems and other than building Japan up militarily which will really cause consternation in the Pacific Rim, his ideas bring nothing new to the table and only will hasten eventual ruin for the country. This is not the type of leadership that is going to get Japan anywhere. While the pendulum swung up and back without Koizumi becoming totally forthcoming about his proposed visit. While neighboring countries festered, Japanese Prime Minister kept everyone in the dark about his plans but eventually paid the shrine a late afternoon visit on Monday August 13, 2001. 

A Strange Form of Diplomacy

He was meet by both protesters and admirers. However some of Japan's neighbor's made it brutally clear how they felt. China said: "China's position on this question has not changed at all. We are opposed to Japanese leaders paying their respects and worshipping at  Yasukuni Shrine to class-A war criminals. South Korea joined in: "We cannot find the words to express our concern that a Japanese prime minister would pay homage to war criminals who destroyed world peace and caused indescribably damage to neighboring countries." Korea's passion was visibly demonstrated when 20 men in Seoul in a coordinated effort simultaneously cut off their little fingers in a sign of protest. 

The only thing that the new history book did when the press rolled out the initial copies was to bring out both domestic and international rioting against it. Crowds gathered around the education ministry building waving banners and admonishing an unrepentant Japan relative to the event.  Perverting history is little different from burning the books that tell about it and Japan seems to be going down the same road that Hitler initiated.  South Korea sent in thirty-five corrections that they thought should be made to the primers. These new textbooks which are now being used by students aged 13 - 15 in Japan have changed the face of history towards the illusionary and South Korea is not at all happy about it. Prime Minister Koizumi has thrown down the gauntlet and indicated that in spite of South Korean protestations, no changes will be made. However the uproar  became overwhelming and minor adjustments were made in an otherwise ludicrous undertaking.  However, Chung Mong Joon, the South Korean vice president of Fifa, Soccer's governing body said that Japan must "correct" the text books if the two countries were to co-host the tournament successfully."

The noises made by the North Korean were somewhat more ominous. They requested numerous visas for their officials who were planning to visit Japan to institute a formal protest against the textbook. Japan probably played right into North Korean hands by declining to issue the Visas. Ominously, Japanese officials indicated that the reason for their position was for the sake of "national security and interest." North Korea was not at all satisfied with the Japanese response and more, will certainly be heard on this matter in the near future. 

This whole act isn't playing very well to its intended audience and if anything, the new pot stirring in Japan is having a negative effect, at least where China is concerned. They have been using Japan's territorial waters to regularly run naval exercises and there has been a constant battle of words going on over which country controls a set of uninhabited islands in the East China Sea.  While the more nationalist oriented Japanese make a big deal out of toughening out these dealings with China, if it were not for the fact that Japan is paying what amounts to massive homage to China in the form of economic aid to keep them happy and quiet they would probably already be toast. The People in Japan are confused by the fact that Japan is continuing this "aid" process in spite of the fact that China has become the region's economic powerhouse. Eventually the "aid" to China will be stopped and the people of Japan will get an opportunity to see just what China thinks of them. We would not want to be in their shoes when that day arrives. 

China had warned Japan about the folly of the Koizumi undertaking. "China resolutely opposes visits by Japanese leaders, in whatever form and at whatever time, to the Yasukuni Shrine, which honors Class A war criminals. WE express our strong dissatisfaction with this action by the Japanese leader."

A small hint of how mad the Chinese really were came when a short time after Koizumi's silly adventure, summoned the Japanese ambassador to Beijing and in no uncertain terms told the Japanese that this singular act had done more to damage relations between the two countries than anything else during the ensuing 50-years since the end of the war.

However, as we all know, Japan is a strange country at best. The conservatives faulted Koizumi for trying to palliate the message of his trip and the liberals with nothing better to do with their time, sued him. He was charged in numerous lawsuits filed in the Osaka District Court as well as in others with violating the Japanese Constitution. Their action went like this; "Yasukuni Shrine is a symbol of the imperial system and militarism. Paying tribute at the shrine violates Article 20 of the constitution, which stipulates freedom of religion, and is tantamount to showing respect to the Class-A war criminals honored there." The plaintiffs are asking for monetary compensation and a stop to visits by high ranking officials to the shrine. Interestingly enough, there seemed to have been some precedent for the cases, in 1991, The Sendai High Court ruled that a 1985 Yasukuni visit by Prime Minister Yasuhiro Nakasone who was then Prime Minister did violate the Constitution. This ruling was followed by decisions that were similar in Japan's two other high courts in 1992. However, these things are of little importance in Japan and ruling are for the masses not for the government.

However, With All That Grandstanding, What's Been Accomplished?

Koizumi was elected in Japan's Prime Minister, garnering 80% of the vote running as a reformer. He was assisted in his campaign by his "Hollywood Style" haircut  and his plain-talking promise of reforming the way Japan does business. However, caught between a series of political scandals along with an economy that still won't wake up, it has cut into his popularity dramatically. While he has made some progress in slowing public spending and the  dismantling of some minor government agencies; the fact is that unemployment continues to grow, there has been negative progress in terms of solving Japan's bad loan problems, he has not been able to disband the state-run Highway Corporation with its imbedded pork and the country is one of the few in the world facing continued deflation. An interesting example of the prime minister's retreat to the old way is the case of Daiei, the biggest supermarket chain in Japan.

Daiei, knowing little or nothing about real estate jumped into that market literally at the peak, just because the money was readily available from its lending source. The outcome was obviously disastrous. The company has been bankrupt from just about every conceivable point of view for about a decade. In spite of this, recently the government pushed the banks to not only renew their old loans with Daiei but to give them additional working capital commitments. However, Koizumi was damned if he did and damned if he didn't.  With unemployment at the highest levels in Japanese history, the government would have had to take care of Daiei's out-of-work employees and it was easier to let their banks keep them breathing albeit with a respirator than for the fiscally impaired government to deal with it. However, this only prolonged the misery and with borrowing costs hovering near zero, the government has little if any wiggle room.

The Negative Effect of Securities Prices

As rates drop, so does the value of the portfolios of many Japanese enterprises, as well as most of the nation's banks and insurance companies. However, this is a two-edged sword because of the fact that with rates plunging, the government does not have a major problem paying interest on its obligations. Moreover, the psychological risk factors may outweigh the the real inherent benefits. Historically, what goes up most come down and when it does, it is usually bad news. Japan has the highest public debt load (currently 140%, bigger than its gross economy and slated to hit the unbelievable number of 200% by 2007) of any economy in the world and it is only a matter of time before public losses confidence in its government's fiscal policies. Should that occur, interest rates could skyrocket and the could eventually be a debt default. Amazingly, the government two year bond is yielding only 0.88 percent. Where on earth can it go from here. Certainly not a lot lower unless the government determines to charge people for the right of owning their debt. Insurance companies that rely on their interest income to pay their policyholders, are now having to dig deep into their pockets to make up the difference. How long they can continue footing this bill is unknown, but it certainly isn't going to be forever. However, conversely, in order to pump more money into the economy, the Japanese Government has recently been forced to buy back their own bonds, artificially lowering rates even further. The more they buy, the worse the situation becomes in the long run will become.

Making a bad situation even worse, the government announced that they were going to begin buying stocks directly from the banks portfolios that hold them. However, there was one minor obstacle to the plan. Japan's Central Bank, the Bank of Japan as part of its charter cannot buy equities; but as they say, where there is a will there is a way. So if this continues for very long, the government will eventually own the banks in sort of a form of reverse privatization, certainly a large step in the wrong direction. Any losses on these stocks will have to be reflected on Japan's fiscal report and if the public thinks that their Government is going too far out on a limb, they may cut it off. In the alternative. The short-term advantage here is that the Central Bank is helping the banks while giving some impetus to aiding their ailing stock market. The Bank of Japan announced in justifying this policy that these large shareholdings of the banks were "a significant destabilizing factor and reducing such risk is an urgent task. Japanese banks have a lot of shares, and as the central bank, we want to help them reduce the impact of falling stocks."

However, this action could bring unpleasant alternative actions that would tend to forcibly dissolve the way that Japan's Banks do business. For the most part they are each tied into the industrial companies that they act as lenders for. Generally speaking these holdings would represent the most significant element of their portfolios. Having a much smaller position would tend to loosen the ties with these large corporations and open the door for better capitalized, internal and external competition, changing for all time the way business is conducted here. Most experts believe that the Central Bank will be sold at the "bottom of the barrel" or lower when it comes time to liquidate their banking portfolios, probably booking an eventual loss of nearly 100%. We certainly couldn't argue with that position.

However, The real problem behind Japanese banking is the fact that as opposed to normal Central Bank report, Japan has three types of loans as opposed to two. Normally, bank loans are considered either performing or not-performing. This means simply that the debtor is either paying the bank the normal principal and interest payment when due or it isn't. Japan has a category called "grey" loans which according to their treasury officials are neither fish nor fowl. This category defies definition and yet, at least 11 percent of all bank loans in Japan fall into that category. As best we can tell, this means that the overall business of the debtor seems to be non-viable but it somehow it is able to pay at least some interest on their loans. It would not be a stretch to believe that unless a miracle happens, the great majority of these "grey" loans will ultimately default. This would create a panic because as a category they are over twice the size of the non-performing loans which have created a $500 billion dollar banking shortfall.

Logic would suggest that if these loans are able to continue paying interest, there are profit making sectors or divisions of the debtor company. Thus, by throwing the losing operations into bankruptcy and sticking with the winners, the company and the bank in the long run would be far better off. However, in Japan, this has historically not been an option because bankruptcy here is a fate worse than death and it is just not part of the culture although perfectly legal. While this attitude is gradually changing, the change may not be soon enough to save the system. Moreover, with interest rates close to zero, it takes no great shakes to stay current on at least that portion of the debt. Thus, reality has been masked and you can't tell the winners from the losers without a scorecard.

While banks in the west have substantial restructuring departments, this is a field literally unheard of in Japan. There is little talent for dealing even minimally with this matter here. Even the Resolution Collection Corporation; Japan's answer to Resolution Trust, has no staff capable of dealing a restructuring. However, what do you really do when your back is against the wall; Goldman Sachs estimated that the amount of risky loans on Japan's books is $1.9 trillion or 50% of the country's gross domestic product. Moreover, Goldman Sachs' estimate is about 50% over the estimates those given routinely by the Bank of Japan. Something is going to have to give way soon.

Moreover, to add insult to injury; as opposed to our Resolution Trust, the Japanese version takes over bad loans and keeps the operation going in order to avoid taxpayers from seeing the losses. Naturally, in time, this will only make a bad situation much worse. In addition, it is a whispered fact that the entity has under-provisioning for the loans and therefore could eventually take a hit that would be larger than their starting capital. With property values down an astounding 84% in Japan since the beginning of the 1990s, the banks do not face simple solutions. In real dollars we are talking about a loss of value of almost 11 trillion dollars, a number almost inconceivable to fathom. That is probably more money than all of the stocks traded in the United States combined. How on earth could this be. With losses of that magnitude, it would appear that Japan has already slid into the sea. Without the massive public spending projects, Japan would already have been dead meat. The Japanese  have put an inconceivable amount of money into these massive projects in the last decade primarily to fuel the employment engine.  Many foreign investors are now getting nervous and are cutting their exposure to this marketplace. 

However, in spite of the fact that they may be thinking of cutting their losses, the inter-relationship between the yen and the dollar has to a major degree, lost its importance. Interestingly enough, the only mutually competitive major industry in which these countries compete is in the automotive field.  And those that say the prices at which these currencies trade is no longer a significant economic factor just may have a point in a very obtuse way. When you restructure, you winnow employees, sell real estate, cut salaries and benefits and trim production costs. You merge with a synergistic partner and put out all your purchases to bid while cutting down on corporate entertainment and travel. We believe that if a substantial number of Japanese companies and banks did a really serious restructuring job, the unemployment rate would be over 15% and the economy would become  permanently dead in the water.

Today, under Japan's ill advised strategy of keeping dead wood alive, the Japanese corporations are helping the government keep the economy moving in spite of severe obstacles. While this hypothesis flies in the face of historic economic theory, our figures show that it is absolutely on target. It may be that Japan will have to put up with an obsolete economic system literally forever because of the box they have put themselves into.  Remember that this is Japan where the economy is terribly dependent on government orders for survival, it seems to be a fact that two badly run companies will get more government business than one well run merged entity. That's the way it works here.

Insurance Companies

The insurance companies also hold prodigious amounts of other Japanese securities. As stocks fall, the ability of the insurance companies in Japan to stay in regulatory compliance as well as write new business to stay alive at same time becomes iffy. Life in Japan among the insurance and banking industries has been historically one of very cozy relationships. This process of "I'll scratch your back and you scratch mine" is called "double gearing and it consists of the banks owning the insurers' subordinated loans while the insurance companies are the largest stakeholders in the banks. There would be a distinct possibility that the collapse of one could led to the collapse of the other.

In the Japanese life insurance industry, literally all of the companies are owned by the policy holders (mutuals) and as such are not public and thus have little opportunity to raise money other than through their symbiotic relationship with the banks. However, the banks have their own problems at the moment and in a fight for survival of the fittest, no longer have any lifeline of their own, let alone one to toss to another company. For fiscal 2002, nearly if not all of the life insurance companies in this country lost money.

Moreover, there are certain hidden dangers within the mutual  insurance field that may not be inherent elsewhere within the Japanese economy. While most large companies in Japan are listed on the stock exchange, the mutual insurers are not, taking a large part of the regulatory underpinning out from under this entire category. Thus, there may well be numerous of the insurers that are already bankrupt or nearly so, but no one has yet discovered that fact as yet. However, no one in the Japanese Government is hardly interested in looking at their dirty underwear at the moment at least. They cannot handle another economic disaster right now and are looking the other way with all of their might.

Furthermore, just as the banks don't want to unload securities off other members of their cartel, neither do the insurers. They depend upon their "partners" for insurance business and could find this segment "out for bid" should they dispose of too many shares. Certainly a "Catch 22" if there ever was one. Most important of all of these problems is the negative return to the individual insurance companies when one analyzes the guaranteed return to policy holders and what the insurance company is bringing in interest income. The situation has become so bad that as a group they have lobbied the government to be allowed to rewrite their existing policies at a lower guaranteed rate. The Government fearing a loss of additional face in the Japanese economic system, has so far refused. Moreover, cancellations are up, the birthrate is down and people are not buying new policies. A death knoll to an industry. In addition, The Life Insurance Policyholders' Protection Corporation of Japan has literally exhausted its resources in bailing out the policyholders of several previously failed insurers and there is no available second line of defense. The Government is talking about the insurance companies contributing additionally to the fund but most of the smaller companies can't afford it. An almost hopeless situation.

Real Estate

Some say that at the height of the Japanese real estate bubble, the grounds of the Imperial Palace in Tokyo were worth more than all of the land values combined in the State of California. In 1990, the Bank of Japan alarmed by this situation raised interest rates to temper real estate speculation and thus stopped the boom dead it its tracks. We all know what has happened since then, but the problems within the real estate market reverberated all over Japan, in the equity market, in the bond market, in the banks and in the insurance companies. Rents had to be enormous to overcome the sky-high land cost. Thus, with the economic downturn, companies have been moving to more affordable quarters for over a decade and many choice buildings in downtown Tokyo are now renting for prices that are more affordable. 

By certain yardsticks, the real estate market dropped through the bottom of the barrel and in any sustained fall, usually prices collapse further than in a more normal correction. This is what has happened in Japan. However, the drops have been so severe that this is probably the only area in the country that is seeing direct foreign investment. Many of the biggest players in the United States have taken large bets on important slices of Japanese property. Because of the economic recession here, it is probably to early to tell whether the bets will pay off or not, but prices here are now cheaper based on annual rentals as a percentage of purchase price than in competitive spots such as New York, London or Hong Kong. This industry is now a major source of foreign exchange in an arena where everything else is still in freefall.

Short Term Economic History

Historically, it is interesting to note that after World War II ended, in order to help the Japanese recovery after the war, General Douglas MacArthur created a relatively fixed peg between the U.S. and Japanese currencies which remained for a substantial period of time at 360 to the dollar. In reality, by importing Japanese goods, the United States had created a different kind of Marshal Plan in the Pacific that was equally as effective as the one in Europe.

The value of one's money in the world market has usually been the difference between economic success and failure. From a strong growth economy that lasted well into the 1990s, in 1995 the yen hit 79 to the dollar and though from all outward appearances, Japan looked immortal, that was the beginning of the end for their economy as we knew it. Their dollar had reached an unsupportedly high level and their exports were no longer the least bit competitive. As alternative example of how to run an immerging economy,  the Chinese currency is literally pegged to the American currency  at a ratio of 8.27 yuan to one. 

No matter where the currency went from that point on, the people had lost confidence in their country and without that, the Japanese internal market collapsed. People were socking away their money and purchasing of anything but necessities had literally come to a standstill. Neither the United States nor China economies are affected any where near as substantially as Japan is by the fluctuations of the value of their currency. 

Part of the problem in Japan harkens to their unbending labor costs. Jobs for life, benefits and the like. What all of these factors are considered, Japan's labor costs average about 25 times those of China and do not look to change substantively in the next several years. It is for this reason that for the first time in their history, Japanese companies are not only producing in China but they are allowing Chinese run factories to use their branded names. In reality, the Japanese are competing against themselves. As an example of this trend, today Toshiba is basically a Chinese company from the point of view of the origin country of their products; something that would have been unheard of a scant number of years earlier. The Japanese move to overseas production facilities is now means that a weak yen can not as easily allow the country to export its way out of a recession. Their substantial investment in China, the rest of the Pacific Rim along with the United States have caused the normally important currency factor to be blunted.  

The original betting when the new prime minister entered office was that it would take until 2007 to solve the nation's banking and economic problems, now they are laying even money that it won't happen in our lifetime.

Other matters that have been left on the table are the much flaunted privatization of the post office and the dismantling of the Housing Loan Corporation. It would seem that senior members of the Japanese Government are more anxious to maintain their well-oiled status quo than dealing with the realities of a failed economy.

Yakuza Express

The art of the shakedown in Japan has risen substantially above the basics. The streets of Tokyo in particular, are filled with sound trucks populated with what looks to be a Japanese version of skin-head types dressed in military fatigues looking for a fight. Fundamentally, these overbearing and highly portable sound machines are forums for a shakedown. Should you want to subvert a business competitor in this country, all you have to do is pick up the phone and call the nearest yakuza express location and pay them to park one of their sound trucks in front of your competitor and they will beam horror messages about his business practices to anyone within hearing distance. Moreover, it is not obligatory that the vocalizations have to have one bit of truth to them. The fact is, that many of these hoodlums work hand-in-glove with local police and are granted some form of impunity.  

Does someone owe you money? The court system in Japan is laborious and more importantly the people are not particularly litigious. However, why waste your time suing someone when you can hire the a sound truck to blast a message over his entire neighborhood about what kind of a deadbeat you are dealing with. The Japanese are extremely socially conscious and having their private matters hung out to dry, in a public sense is enough to send them scurrying to make payment. This form of extortion is the required methodology in solving certain problems here and no one is particularly surprised anymore when a sound truck pulls up. The only surprise is who will be the victim of the verbal abuse this time.  

Usually, the tirade begins with the playing of Japanese martial music which is dramatically utilized to get everyone’s attention. The next step out of the box depends upon the target. Not surprisingly, the sound truck people have extremely conservative leanings and because of this bent, are used by Japan’s conservative political parties to attack their enemies. The main utilizer of this form of political blackmail is the incumbent Liberal Democratic party. Thus, under this scenario, when the martial music has ended, the propaganda begins, starting with the Japanese Emperor and his wondrous talents and ending with extreme militaristic propaganda. The fact that these trucks are operating at a decibel level quantumly higher than the law allows does not seem to challenge local police officials in the least. They have been advised in advance of the cacophony’s message and have usually been paid to pave the way for their freedom of speech. Hideo Kurokawa who is the spokesman for the Tokyo Police Department said: “We are not protecting these people. It is more like guiding them through the streets.” 

Japan is well aware of the stinking international message being sent by these vocal hit-men. Thus, whenever there is an international media event happening in Tokyo, these sound trucks seem to mysteriously vanish into thin air only to reincarnate themselves when the last media visitor has departed.  However, one of the main targets of the extortion trucks is the liberal media in Japan. The Japanese press lives in deadly fear of retaliation from this group. For this reason, there is not a lot of press given to what these folks are getting away with for fear of immediate and catastrophic reprisal.  

The sound trucks in order to make their point more meaningful have to send a unifying message and with no minorities to attack in Japan, the common political attack theme has become one of opening old war wounds while praising the emperor. Thus, by laying the right foundation, the type of aggressive political propaganda can make its point.  These gangsters of the right, hide behind righteous indignation and as one of their leaders, Misuhiro Kimura put it: “Japan today has lost its purpose as a nation and is stuck with a dysfunctional system. Political corruption is beyond belief. I just don’t believe the law can fix all the problems”  Thus, it appears that they have taken matters into their own hands.  

While the sound-trucks may have some ultimate effect in shifting public opinion and ultimately changing the system, its potential result is to unpleasant to comprehend.

 A Ship of Fools

Japan isn't the only country where a few crackpots think they can create a better society through an extreme form of social appeasement. What makes these silly Japanese look like they come from another world are strange windmills that they attempt to attack. Even Don Quixte wouldn't try to conquer some of these targets. In any event, there is this aging Ukrainian flagged cruse ship that was floated bearing the name, Leonid Brezhnev and now called simply the "Peace Ship", that plies the waters from Japan to just about everywhere politically untenable to the Japanese Government. Containing a cargo of mostly unwashed college age young Japanese peaceniks, this boat arrives at the locations such as the Kuriles, the hottest potato in Japan's Foreign Ministry's bag of tricks.

In spite of an order from the Japanese Ministry banning the ship's cruise to area claimed by Japan occupied but occupied by Russia, with whom they are still in sense at war, certainly didn't stop this strange collection of activists.  Not illogically, when commenting on the ship's destination, Sankei Shimbun a Tokyo newspaper known for its conservative nature described the passengers as "a boatload of anarchists who should have their passports confiscated." 

The "Peace Boat" bringing its always strange message has traveled to such exotic destinations as exotic North Korea, a country that has no diplomatic relations with Japan and  where Japanese citizens have been brought after being kidnapped; Cuba where they received a personal greeting from Fidel and who went on to extol the virtues of Communist life; the Russian Island of Sakhalin where they met with ethnic Koreans who were demanding compensation from Tokyo for being turned into slaves during World War II and the Philippines where the hippies met with indigenous people who had been roundly tortured by their Japanese conquerors.

One of the boat's founders, Tatsuya Yoshioka seems only concerned about the fact that the country could return to the militarism found in Japan during the late 30s and until war's end in 1945. He defends these lunatic fringe trips with: "The people who have direct experience of the war are almost gone. I read a survey where half of Japanese teenagers did not even know that Japan and the U.S. fought a war." However, before we cry idiocy, remember that we are the country that spawned such ilk as Jane Fonda who did even worse.

Learning Another Language

Maybe it is just a sign of the times or maybe it is smart planning, but more and more Japanese firms are making knowledge of the English language, a virtual requirement for employment and advancement. An example of this is the fact that last year, Matsukshita did the unheard of. They indicated as a matter of corporate policy that unless all of their managers became competent in English, they could not be promoted. Matsukshita was not alone in this decision, they were joined in this action by Toyota, NEC, Hitachi, Komatsu along with many others. Japan is finally getting the message that English is the language of the new global economy and without it, they are not going anywhere. Interestingly enough and in spite of intensive English preparations in school, as far as Asian nations go, only Afghanistan, Laos and Cambodian workers show less ability to navigate in English than do the Japanese. The Japanese model has proven to be inferior and unless a lot of catching up is done in a great hurry, there will be little left to save.

We are seeing more and more money from Japan being transferred to vehicles in the United States and elsewhere and a movement in the upper strata of the population towards getting out of town in a hurry. Sounds like reasonably good thinking to me.  

Religion Takes a Hit

The shrine that the Japanese Prime Minister visited that was so controversial was also part of a Shinto religious property. However, there is no question that religion in Japan has been on a steady decline for many years, but in Japan religion has always been a horse of another color. Kurt Singer in writing about Japanese religious beliefs put it into perspective in his book, “Mirror, Sword and Jewel,” “The religious practice of an ordinary man is highly complicated: he is likely to be Shintoist as a Japanese, Buddhist in face of death and suffering, Confucian as a social being in general, personally often a Christian and as a man of science, a materialist.” In spite of the hodge podge of apparently conflicting religious beliefs that the Japanese practiced, eventually the pursuit of educational advancement and material wealth became the two new altars that most of the Japanese had recently converted to.  

Because of these new codes of belief, religious centers soon became historic monuments rather than a place to practice one’s beliefs. Full employment and smaller families took many of the potential for the priesthood out that job market. Due to that fact, eventually there were so few religious leaders available that in almost all cases, women were allowed to assume that mantle. However, their roll had become largely superficial, as very few Japanese were interested in attending religious services anymore. Left with a choice of either closing their facilities or finding an alternative source of income to pay for upkeep, the usually strategically located houses of prayer were rented out for other uses not necessarily having anything to do with religion, such as providing rental office space for business use, for providing rooms for business meetings, for particular spiritual cleansings and for non-religious weddings.  

The idea of a wedding that is performed under a formal religious setting has almost vanished in this country, a score of years ago almost 75% of the population was married in Shinto Religious ceremonies.  Today, the purely religious wedding has become literally obsolete. The quality of a wedding in Japan is determined more by the quality of the reception than the act of joining the couple together usually by a principal of the wedding license issuing authority. This is not to say that the Japanese don’t reach out for religious assistance when things go poorly for them, but that is about the only time that this happens. It is clear from the fact that the Japanese can juggle so many religions at the same time with each having its own ultimate deity that they couldn’t  be taking any one of their indigenous religions all that seriously. Each represents a particular place to go to solve a specific problem for the Japanese and even that practice is rapidly becoming obsolete. Howard W. French in The New York Times did a story about a particular Shinto Church, whose chief priest was a woman that was seeing increasing diminishing traffic and what they did about it. 

With few people living in her shrine’s vicinity and an awareness that young people have little interest in shrine ceremonies generally, Ms. Sugimoto has pushed the business angle as far as she can. Her days are now spent performing purification ceremonies for television studios that hope for success with new plays or sitcoms, or blessing new construction sites to ward off accidents or earthquake damage.”   

The bottom line regarding religion in Japan is the fact that if tomorrow, a high percentage of the Japanese population decided that they wanted to revert to practicing religion again, it would literally be impossible from a practical point of view. There are not enough clergy left in Japan to even support religious services for a small fraction of the population.  

The Emperor

The Emperor himself in this country is considered to be a deity (a man with divine qualities) or more but he is not necessarily affiliated with any particular religion. (The fact is that under substantial prodding by the Americans directly following World War II, the Japanese Household Agency issued an edict denying the emperor's divinity, but no one in this country either remembers it or heard it at the time) The title that he bears is that of current occupant of what is known as the 2,600-year-old Chrysanthemum Throne. Historically, in this country the Emperor's affairs are not the business of common folks and Akihito, the reigning potentate is not dramatically  different in this respect than his forbearers. However, in an apparent effort to humanize this reclusive creature, it was recently announced that the almost 70-year old monarch had contracted prostate cancer. While it turns out that the disease itself is not life threatening, the fact that the emperor can contract anything that smacks of human frailty is tough for the Japanese population to swallow. Based upon recorded history, it would appear that this is the first Japanese Emperor in recorded history that has ever come down with a disease. It would appear that they come down with medical anomalies but never diseases. The culture seems to be of the belief that Emperors of Japan do not die of disease, they just ascend to Japanese heaven at the anointed hour. 

This admission of the realities has a definitive base in the ongoing but painful modernization of the country. Japanese medicine has historically had an aversion to letting patients know either their disease or its prognosis. In a seriously flawed concept, they have believed that neither common people or even Emperors could deal with medical realities. That the shock of knowing their problems could potentially cause more serious problems than the disease itself. And this medical openness holds equally true when the patient has an ingrown toenail or incurable cancer. Patient's rights are historically not part of this culture. However, with the broader education brought by internet and more extensive travel, the Japanese have suddenly realized that they are being shortchanged in their medical treatment and often fatal decisions are left to the medical profession and not the patient.  Recently however, the Emperor himself apparently expressing mortality and the need for more medical understanding in general has opened the door for reality to seep into a cluttered society that relied upon a form of surrealistic voodoo to explain away physical occurrences.

However, Akihito, the son of Showa or Hirohito as he was known in the West, has made a practice of breaking the mold and among other empirical innovations was the first of Japan's monarchs to marry a commoner, the Empress Michiko.  Simultaneously, the more liberal Emperor also broke down many of the stigmas attached to informing the world as to what was really going on behind the walls of the Forbidden City. He has begun to humanize his godlike role and seems to have won substantial support from the population while doing it. This is a far cry from his enigmatic father, Hirohito who ruled during World War II. Hirohito's voice was never heard by the populace until he announced Japan's surrender in 1945, something that must have really pulverized Japanese sensitivities. To finally hear this godlike creature speak for the first time, but in total and unconditional surrender to the West. While General MacArthur demanded more openness from Hirohito, he was unable to handle the role.

Interestingly enough, when Hirohito became ill with pancreatic cancer in 1988, the news was full of medical reports on everything except what his problem was. It was only after he died that the public knew what his medical problem really was and worse yet, the Emperor himself may have never been told what his ailments were. In any event, in a land where social progress moves at the speed of clam, Akihito has been seen on the street with his wife and children, actually have on occasion talked to passers by. While in most of the world, this is a non-event, in Japan, it is like the parting of the sea has taken place.

On June 20th, 2002, the emperor did something that been unthinkable in Japan for almost three millennia. He gave a press conference where he actually answered was purported be answering questions from the public. However, in a really well orchestrated effort, that was not the case. What set this new found openness apart from those press conferences as we know them was the fact that only questions approved at least two-weeks in advance would be allowed. The best of the questions when unasked and unanswered; this was not a day for curve balls. This was hardly an open forum with everything orchestrated in advance down to the fact that the cameramen had to wear conspicuously similar black suits.  The only thing that seemed to break with tradition was the fact that the Emperor's wife, spoke more than the allowed half as much as her husband. The main subject matter concerned his forthcoming trip to Austria, Poland, Hungary and the Czech Republic along with tidbits from his wife on music.  In spite of the Emperor's effort to become a jolly fellow, well met, Hideaki Kase, a prominent Japanese author described the man as "the intermediary between heaven and earth. Culturally, holy people, sacred people, are not to be seen in public, not be talked about. For example, no Japanese government would print the emperor's face on a postage stamp." 

Unemployment and Security

Several unique economic trends that are occurring simultaneously in Japan. The first is the fact that the unemployment rate in that country has gone to nearly 6%, a rate higher than that of the United States. The other is that the popular stock market averages in Japan have dropped from over 39,000 to where it currently is trading a tad above 8,000. It appears that it will not take too much longer before the Dow is higher than the Nikkei something not seen in these parts for over a generation. (shortly after this was written, this did occur) However, these events are not happening within a vacuum. The automobile industry is probably the best example of any in Japan that can give chapter and verse of why this is happening.

Economists are now conservatively predicting that there will be a loss of 143,000 jobs in the Japanese auto industry, most of which is going to come from the parts manufacturers. Simply put, the industry is gradually being acquired by foreign companies which are not going to stand for the old theories of full employment in spite of hair raising loses. DaimlerChrysler purchased 37-percent of Mitsubishi Motor and they have cut almost 10,000 employees, Ford has acquired a 34-percent slice of Mazda and they are cutting what has been said to be a similar number of employees as was Daimler. Renault took 36.8 percent of Nissan and it is here where the steepest cuts are taking place, 21,000. Those numbers are the bad news, however, after these cuts, expenses will have been reduced substantially and the companies will eventually become more competitive. However a number of additional changes are going to be required as well.  

There are only two independent automobile companies left in Japan and interestingly enough they have no particular move to reduce excess employees. The theoretical difference between the two systems seems to boil down that in Japan, companies tend to place employee loyalty ahead of stockholder values, in the rest of the world it appears to exactly the reverse. In addition, the Japanese industries tend to internally compete with each other to a degree unseen in the Western World. They have tended to lower prices beyond the state of profitability just to keep their competitors out of the market. Thus they are buying market-share for the sole purpose of buying market-share, giving little or no thought to profitability. Lastly, the fact that more and more Japanese car manufacturers are finally finding out that they cannot produce cars economically paying the kind of wages that workers in Japan require. 

As western style purchasing starts to take wing in Japan, the auto parts industry will be forced to consolidate as the auto manufacturers give purchase orders to increasingly fewer purveyors.  While inroads have been made by foreign companies into the auto manufacturing business, there are literally none that have acquired companies in the parts business. This will begin to change more dramatically as western production processes begin to take a firmer hold. It is in this industry where the major layoffs will occur, probably effecting 75% of all of those laid off in the automotive industry. At the same time, the recession in the United States will also take its toll of industry in Japan in general. 

Japan's unemployment rate is now at its highest since 1967, but possibly the worst news is the fact Japanese wage earners continue to refuse to spend their money keeping a lid on the total economy. With looming deflation along with an aging population, Japan is looking more like a boxer that has just gone ten-rounds with a much better and younger fighter and is just hanging on to finish. (Putting Japanese deflation into perspective is simple, retail sales are dropping at a rate of about a compounded 2% a year and have been doing so for about 5-years). This number can't improve appreciably until the consumer confidence numbers move up and they now stand at about 37 percent, a number which almost precludes spending for anything but necessities. Household spending continued to drop and fell 4.4 percent in December of 2001. Figures released for 2001 indicate that fully 70 percent of all Japanese businesses made no taxable profits.

Currently, there are two applicants for every job offer in the country, a figure that has not been surpassed in 28-years. Historically these numbers have been skewed because as women lost jobs many of them would revert back to becoming homemakers, thus taking them off of the unemployment roles. This is no long possible in many families so that year to year comparisons will be hard to make.  Moreover, Prime Minister Junichiro Koizumi's  popularity has begun to sink like a lead balloon and unless the yen can decline substantially against the dollar to increase exports, the overall economy  almost looks like it can land in free-fall drop. Working against a fall in the yen  is the fact that the United States is also in slowdown as is much of Western Europe and a quick fix is not on the horizon. 

Moreover, Japan's nescient deregulation is only adding to the layoffs while foreign competition is at an all time high. Worse yet for the sometimes macho Japanese is the advent of more women entering into the workplace, many of them at an advanced level. Perhaps the unkindest cut of all is the fact that the little woman could now be out of the house when her husband arrives home from his late night drinking bouts with "the boys". As the New York Times so aptly put it in an article entitled Teaching Japan's Salarymen to Be Their Own Men, of November 27, 2002, they said; " Like many social phenomena in Japan, the collapsing status of the corporate warrior has generated its own vocabulary. For younger women, the dark-suited company men seen everywhere walking two or three abreast, chain-smoking, their heads slightly bowed are dasa (uncool) or nasakenai (clueless). For the wives to whom many of them return home in the evening, meanwhile, they are the nure-ochiba zoku (the wet leaf tribe) -- clingy, musty and emotionally spent." 

Women in General

The men  are talking a severe multiple beating in this economy. The women who used to idealize them by the numbers have  now found a life away from Mr. Macho. Men a rapidly losing face in both the arena of employment and that of love. They are now no longer the masters of their own small environment, as a matter of fact they are now masters of literally nothing. Japan's new motto is "No more jobs for life" and their home life is slowly becoming "out for lunch" as well. Japanese women are no longer satisfied with their hard working husbands who come home too drunk to care about them or their families. The more educated of the women are going to school abroad and finding less barbaric men to couple with in a more pleasant atmosphere.

Men reaching the age of forty without finding a wife are now looking to other countries to find woman for companionship and marriage. Japan, until recently, an ethnically driven, socially isolationist country has now gone into a demographic tailspin. Japan's population is expected to fall from its current population of 126 million with only 1.5 million foreigners to under 100 million with a much higher percentage of foreigners in the next fifty years. Where courtship used to begin and end at home, today, there are over 200 international marriage agencies in Japan with the majority specializing in Chinese introductions. This is not particularly looked upon with favor by such folks as Tokyo's eloquent governor, Shintaro Ishihara who calls the Chinese immigration a source of "genetic pollution." There were almost 40,000 "international marriages" in Japan in 2001, a figure that is up a startling 650 percent over 30 years ago.

Foreign women. especially the hated Chinese are willing, at least for the moment to put up with the Japanese men for a price, something that the Korean women no long need to deal with in their improved economy.  Moreover, the comfortable Japanese women can now buy their own husbands and live in other countries where they are "more appreciated", and certainly more free. As Masayoshi Toyada, the founder of a series of men's liberation groups entitled Men's Lib Tokyo said, "Eventually, I realized that the problems I was suffering didn't come from me, but rather from Japan's traditional patriarchy. Traditionally, Japanese men don't attach importance to their family life at all. I, for one, hardly ever had a proper conversation with my father...My generation entered the workplace at the end of the bubble era, so many of my contemporaries are being hit by job cuts. My father's generation lived in a bullish era and enjoyed the fruits of their labors. Men stretch themselves today simply to avoid being sacked"

The working women have even started hiring lawyers and starting sexual discrimination cases against some of Japan's leading companies. Worst yet for the men, the court system in Japan is seemingly getting more liberal and recently 12 women were granted $425,000 in damages for being passed over for advancement. What had occurred was simple, Nomura put the men on one track and the women on another. One was for management and the other secretarial. The court determined the difference in pay by being put on one track or the other. The difference was the amount of the award. The court not only awarded damages but found that the two-track system was illegal as well after it was able to determine that "most of Nomura's male employees with school diplomas were automatically promoted to deputy section chief after about 13 years, a level women were not promoted even after three decades." FT.com, Bayan Rahman 4/17/2002. 

However, one of the reasons for the court's aggressive actions was a change in the basic law in 1999. Where previously the Japanese law stated that companies should make "an effort to promote equally" it had now become a necessity. With the old law having gone out the window, so did sexual discrimination in theory but not in practice. This case was a milestone in Japanese law and potentially will send sonic waves resounding throughout the economy. Ms. Mizuho Fukushima, a member of the Japanese bar as well as being a senior member of Japan's upper house of parliament said: "The Nomura ruling is a landmark decision. Until three years ago, cases were often lost in court because a company only to prove that it made an effort to promote equality. This ruling means just saying that you tried isn't good enough any more."  Japanese statistics show that only 2.2 percent of those on the management track in 215 companies surveyed  were women. However, women  made up 91 percent of those on the "general" track. While the decision is being appealed, economist s are trying to measure the potential hit to the total Japanese economy. Apparently they are going to do away with slave labor in this country and the question is, what will this do to production costs?

A More Aggressive Approach (Couple Busting)

Divorce, once unheard of in this country is now becoming fashionable. However, justice moves slowly in Japan and marrieds  that are no longer are interested in their spouses are getting extremely aggressive about attempting to untie the knot. Couple busting has become a big business here and it basically consists of setting up the spouse with a sexual opportunity that is too good to pass. Once, the dupe taken the bait, the romance continues hot and heavy until they usually ask their spouse for a divorce. Now that the deal has become consensual, the courts now are willing to give the deal their imprimatur. More and more women are using this ploy because they haven't gotten a fair deal in court and if only their husbands can be made to want to leave of their own volition, they can sock them through the nose.

Now that the agreement has been reached comes the slick part, the pay-for-play partner slithers quietly away, canceling that temporary cell phone and leaving the temporary address baren. The cheating spouse is now holding nothing but divorce papers and along with a  now empty nest. Tough people these Japanese.

            "There are increasing numbers of people who are reluctant to deal with their personal problems themselves. They want others to do it", says Masaru Nakamura who runs the JRI couple-busing agency.

This is a fast paced, high cost business and is not for the faint hearted. Even the feigned relationships can become emotionally difficult to extract oneself from. The service is advertised under wakaresase-ya or "business to force breakup of a couple" in the Japanese Yellow Pages or on Internet. Women hired to work for the wakaresase-ya usually are lookers with a lot of self confidence and who are willing to bed down with whoever shows up for a price. Women in this strange occupation say that the men are an easy mark and seldom turn them down. Sounds like a legal sounding knock-off of the world's second oldest profession, but these people take their work very seriously and consider themselves specialists in anti-romance.

The women say that dressing up as a flight attendant is a sure winner and will get the errant men every time. However, getting the men in bed may be the easiest part of the job. They have got to keep them around until the deal is done, which may take months. In that period of time, many of the women become attached to their new lotharios and once the divorce is final, become the next Mrs. whoever. This of course plays havoc with the agency and their turnover becomes catastrophic, but this is all in a day's work here in the land of the rising sun.

A Big Guy Moves Into Town

Japan's homes are a fraction of the size of those that are found in the United States. They have little room for storage and even when shopping for food, Japanese consumers are unable to shop for more than a day or two at a time due to space considerations. When Wal-Mart agreed to acquire two-thirds of Seiyu one of the largest supermarket chains in Japan, there was no question in anyone's mind that they would have to learn how to merchandise in an entirely different manner in this vastly different culture. However, Wal-Mart plans to examine the culture in minute detail over a substantive period of time before plunging into the retail fray here, but there is no question that if they can get it right the rewards can be huge.

Fundamentally, Japan's retail food distribution machine consists primarily of local seven-eleven type stores which provide the particular neighborhood they service with everything the people  could possibly need from soup to nuts to just about anything else. They serve as community centers, messaging & communication areas and fast food stores all under one roof. They are, for the most part, mom and pop stores that have become over time an integral part of each community. They could be looked at in a similar manner as was the corner drug store in the United States in the 1940's and 1950's. Where ever your travels carried you during the evening, to the movies, to friends or to dinner, somehow you found a way to say hello to those at the drugstore before turning in for the night.

So Wal-Mart is trying to squeeze into a very small space and for the largest company in the world in terms of revenues, that is going to be an immense undertaking.  Japanese consumers are the most finicky in the world and insist on high quality merchandise that clearly shows its branding and comes neatly wrapped. These consumers are critically earnest regarding the purchase of brand name merchandise and as opposed to Wal-Mart's historic bent for generic merchandise, they will find this obstacle a very tough wall to climb over. However, over a period of time, if Wal-Mart can  demonstrate to Japanese consumers that they are able to sell them high-quality merchandise with bulk packaging carrying no recognizable brand name, they will have made the first giant step towards making inroads into this market. But that is going to be some big mouth-full for these consumers to swallow.

Moreover, the box the merchandise comes in is extremely important in this country where shopping is not a necessity, it is a full time occupation. The packaging if not completely up to Japanese standards can be more than enough to kill a sale. If "brand name" merchandise does not come wrapped to the nines, Japanese consumers could well turn their noses up at the product. And that could happen even if it were offered at a very competitive price. Moreover, the shoppers here also want to know the origin of the product and if it does not come from a place that passes the smell test or is unmarked as to its birthplace, most Japanese shoppers will sniff that it is not up to their expectations and pass. Obviously these are not areas where Wal-Mart has any great expertise as their business was built on mass-merchandizing within areas that could accommodate a shoppers needs for a week or more at a time. Wal-Mart in the beginning had many of the same problems in the United States but eventually their label became considered a hall mark of quality at least high enough to be brought home. While Americans were also interested in pretty packaging and name brand items, bulk pricing soon became more important here and people's standards quickly were revised. As yet the Japanese have never had the opportunity to take this choice.

Moreover, the Japanese do not eat a lot of processed foods, at least if they can help it. Fresh meats, fish, fruits and vegetables are the order of the day in Japan while canned goods, and boxed cereals along with day old produce are not going to move. There is some question whether or not the logistics or the economics exist in Japan to allow anyone enough latitude to cater to these over sensitive palates. The largest problem is the fact that over time Wal-Mart has established firm guide lines  relative to profitability of individual products and fresh foods have very small margins when compared to the processed variety There is little question that Wal-Mart will attempt to change Japanese habits rather than catering to them and this may amount to the immovable object meeting the irresistible force. Old ideas die hard in this country and Wal-Mart, a company that has succeeded throughout the world, in literally every country it has entered could well have met its match here.

"Japanese consumers also buy small quantities of food during each visit to the supermarket because of their smaller living spaces. American tend to shop for the week, filling shopping carts to the brim. 'People in the US will buy green bananas and wait until they ripen,' says Ted Eguchi, a business investment executive at Sumitomo, the trading house that was the go-between in the Wal-Mart / Seiyu deal and is Seiyu's largest shareholder. 'But in Japan, people buy only ripe bananas/ The Japanese go to the supermarket nearly every day. ", says the Financial Times, in an article titled, Wal-Mart develops a taste for Japan dated 5/3/02.

In spite of everything that they have to learn relative to this new economy, Wal-Mart brings with it several enormous advantages. Their labor costs have been historically lower than their new Japanese competition is used to. However, the Japanese minimum wage is substantially higher to that in the United States and they will be stuck with that additional cost. On the positive side though, Wal-Mart does not have layers of overpaid management people wandering around doing nothing just because they have held  the job for years. Moreover, the average employee in a Japanese store is usually a higher paid middle aged female that acts more as shoppers helper and advisor than does the average much younger and lessor paid employees at Wal-Mart. There is little question that Wal-Mart will try to give the Japanese consumers a different kind of service, but with much lower pricing attached to it. The jury will be out for a while on this one, but these guys have not lost a battle yet and so we will be looking at major changes coming soon to the Japanese retain shopping place.

However, whether the theory works or not, it is not going to be easy to get the door all the way open. The price of land here is ferocious and it is hard for foreign companies to buy in at any price considering the entrenched bureaucracy that exists here. The average Japanese store is a fraction of the size of a Wal-Mart and there are not a lot of choice locations where enough land could be put together to accommodate a giant of this size. While purchasing enough land outright is a difficult if not an impossible challenge, renting is even worse with landlords having concerns about foreign companies packing it in when they have had enough and leaving them holding the bag. Even if Wal-Mart was lucky enough to grab a few choice leases, they will be paying substantially more than they would be in the United States which will undoubtedly skew profitability a tad. Obviously Wal-Mart was well aware of these problems when they put their toe into the Japanese water but, once again, these are careful folks and they have not gotten burned yet, so we will be betting on their resourcefulness in the toughest market in the world.

Moreover, Wal-Mart is used to beating up its suppliers at least in a nice kind of way. They are constantly pushing for lower pricing, better packaging and more on-time deliveries. Japanese suppliers, while professional are not used to that type of prodding and may well not take to it at first. However, if they become to arrogant, they may soon find out that Wal-Mart has become the only game in town and will have to learn how to get along with the giant or find themselves another way to make a living. Wal-Mart has become more than a retail outlet in the United States. It has become a culture onto itself. America has changed in many ways because of Wal-Mart and its practices, not the other way around. While this may not have been a great stretch in the United States, it will be an enormous change in Japan. Once again, while we are betting on Wal-Mart, the jury is still out.

Potty Training

How do the Japanese measure their body fat? Simple, they go to the toilet store, wherever that is and purchase a Matsushita potty. When the motivated user sits down on the contrivance, a small electric charge is sent through the person's body a read out is given to the person. However, the creation and sale of this product set off what is known in Japan as the "toilet wars" and others soon came out with competitive products with multi-tasking capabilities.

Toto,  the Japanese industry potty leader, not wanting to be left out of the public relations opportunity came out with an automatic urine analysis device, named the "WellyouII",  which consists of a small spoon attached to a robotic arm which when full, retracts into the micro-potty laboratory which within a blink of the eye comes back with a reading on the user's sugar level.

The ante was moved up dramatically by the entry from Inax which glows in the dark. Moreover, it has an encapsulated sensor that upon reading the fact that a person is going to be using it, the top starts whirling in anticipation. Sort of like a puppy wagging its tail when its master approaches. Such a warm greeting by the potty is seen here as a great advancement but the Inax engineers were only getting started. They also installed a recorder within the confines of the toilet which can be programmed to play soothing music while the user performs his duties to relaxing music. Among the available programs are that of a strummed Japanese harp, rushing water, tinkling wind chimes and the sound of chirping birds.

However, the all-around champion is the toilet brought to us by Matsushita has a greeter lid similar to that of Inax but it takes the effort one step further. Built into the facility are self-contained heating and air-conditioning units which through the use of powerful air nozzles is capable of substantially moving the area's temperature either up or down in a matter of seconds. There people have been given to calling this the Rolls Royse of potties. Moreover, the temperature system can be used as a free-standing system to bring the room's temperature up or down without even using the facility. For example, if you know that you are going to need the potty at a certain hour every day, you can have the toilet automatically heat or cool the entire room for you.

Toilet jet sprays have taken the Japanese potty market by storm and literally everyone has one of these highly complex devices. There are now more jet-spray toilets here than there are computers and fully half of the Japanese population actively uses this self cleaning facility.

Soon to come to the market will be talking toilets that can read human oral instructions to change the toilet's current functions. It will be able to play different music, increase or decrease either force of the water-spray or the toilet's temperature or just about anything else that you would seriously want to talk in confidence to a toilet about.  Think of the opportunities to have mom instruct the young novice in proper potty policy. Instructions could be left on the toilet by mom to automatically inform the youngster as to proper conduct.

After that, they are talking about a potty with an Internet connect that will measure numerous bodily functions and send them electronically to a medical center. The inventors and the scientists are working together to include a device which will measure weight, albumin, urine sugar, heart beat, blood pressure as well as blood in the urine. A toilet doctor according to pleasant plans would be available at the receiving end monitoring a number printouts while the user would be finishing his business. Thus, it could well be that upon leaving the bathroom, the potty medical expert could well already be on the phone informing the depositor of the results of the analysis or better yet, he could get his reading through an Internet phone before finishing his business.

The next generation is predicated to include dietary analysis and the Japanese may well have a new diet delivered to them before they even flush. However, all of this scientific advancement has its problems. Firstly, the government is becoming concerned that the people will become soft as they devote more and more time to a job that historically was to be finished as soon as practicable. Today, people in Japan have a love-affair with their space-age toilets. Going to the potty in Japan today is akin to going to a medical carnival with the toilet playing the roll of the the side-show, the music, the hawker and the doctor. No wonder, the amount of time that people are insulating themselves in this room has risen by 71% in the last five-years.

However, the major down-side to this equation as seen by the Japanese civil libertarians is a potential intrusion into the people's civil liberties. The New York Times in referring to this problem, "There are also Big Brother nightmares about master computers monitoring millions of bowel movements, checking around the clock to see who is constipated, who is not eating his peas and who is drinking too much. I assume the records that come out of my toilet will have the same degree of protection as records that are generated when I take a medical exam," said Lawrence Repeta, a director of the Japan Civil Liberties Union. "There will be police investigators who see this as a great tool to find people who use illegal substances."

The toilet wars in Japan have made scientific laboratories producing new products, off-limits to those without the highest clearance levels. Toilets are big business here in Japan and as the world grows more prosperous, it is the intention of the industry to create linguistically conversant potties that can converse in Korean and Chinese as well for the export market.

A Population Explosion of a Third Kind

 While the human population of  Japan is heading south at breakneck speed, its simian population is spiraling out of control. Historically, the Japanese culture is unusually understanding when it comes to the humane treatment of animals and just about anything else for that matter. Between a combination of unfettered population growth and a high fat diet readily available in local garbage cans, not only has the number of monkeys spiraled in a numerical sense but they are also growing larger physically from their high fat diet. (this is also true of the average Japanese) Thus, number of monkeys has spiraled out of control (1000 percent in a short period of time) and the animals now are beginning to create a minor catastrophe on Japanese highways.  

The apes have strangely developed a common strategy. They sit in the middle of a highway and when an approaching car screeches on its brakes to avoid the creature, the monkeys either jump onto the hood or through the window demanding food. Unbelievably they have even become adept at entering cars speeding along Japanese highways at speeds up to 25-miles per hour. This sudden second-story entry creates momentary driver havoc, potentially leading to collisions.  Moreover, the animals will not go away until fully satiated and with a razor sharp pair of teeth, they are not to be toyed with. Thus, in order to cope with this sophisticated simian shake-down, travelers on Japanese roads are now literally required to carry a “monkey bag” so as not to have an unexpected free-riding consumer join them for the ride. In addition, the Japanese are fundamentally an animal respecting country where the idea of hunting  any sort of land creature, even for food, is looked at askance aiding and abetting the population explosion.  

As animal hunting has diminished to close to absolute zero in this country and with that the monkey population began to rise like a hot-air balloon. At first the increase was hardly noticeable and the population thought that seeing the creatures regularly and out of the wild was an inspirational experience. However, with the monkeys becoming ever more sizeable, they are now becoming a definitive threat to younger children on their way to classes. Mothers are no longer trusting their youngsters to walk even short distances to classes in certain of the monkey captive cities and have now taken to driving children everywhere for safeties sake. Some cities in Japan such as Nikko have defensively criminally banned the feeding of these animals in hopes that the animals will pull up stakes and find another town in which to propagate.  

However, not only are cars and children in jeopardy, but just leave a window open in your home or office and you may return to an unwelcome  coven of simians enjoying your best food and surroundings.  They are now inflicting millions of dollars of damage to crops and farmers have now given to erecting 12-foot high electrified fences to keep the marauders out.  Another unique solution employed by farmers is for them to grow vegetables earmarked only for the monkeys, thus saving the rest of their crops from being ravaged. As Japan imports more of its food, the area given to farms has gradually been laid fallow, decreasing the number of dogs that were the only real natural enemies the monkeys had in this country.  

Japan’s plight is not unique as Hong Kong had the same problem. However, they have chosen to successfully sterilize the animals as a method of controlling the population while Japan has not been able to come to grips with any solution at all. Police have now given to organizing “monkey posses” and equipping the officers with long poles having a bananas at their ends. When the animal grabs the banana, its is netted and summarily dumped out-of-town. However, it does not take very long for these animals to find their way back.

Getting Even?

The Japanese were particularly ruthless during their occupation of  China during World War II and the Chinese have not forgotten it. They are particularly incensed over Japan's return to the militaristic ideology that existed during that period. It is interesting that Japan reserved a particularly nasty methodology in attempting to dismantle China during that period considering the fact that so many of Japan's medical roots can be traced to that relationship. In particular, the Japanese felt that Chinese medicines were a touch above other treatments and when sick, many people in this country would only take those Chinese remedies were made from Chinese ginger, red peppers, coix seed, glycyrrhiza root or turmeric. These ingredients are used Japan to treat everything from head colds to stab wounds. Moreover, many of these imported remedies are considered so effective that they are available only by a doctor's prescription and are covered by the national health care plan. Others are available over the counter.

The amount of the herbal remedies that are purchased by the Japanese from China very year is prodigious. Of the over 62,000 tons of herbs, roots and plants imported by Japan in 2000, almost 50,000 tons came from China.   That comes down to better than one-pound for every man, woman and child in the country. The population here believes that Chinese drugs are particularly valuable because they attack the cause of the disease over time and are not just temporarily palliative. However, as the Japanese diet picks up fat and obesity attacks a formerly svelte population, so have people's tastes in medication. The population of Japan has gone fast-food happy and now regularly enjoy a McDonald's sandwich and fries as part of their diet, but this has caused the population to gain weight by the gob. Once, someone else's problem, Japan is now suffering from an fast growing overweight situation which is unique to their historical system.

However, whenever faced with a medical problem, the Japanese seem always to look westward toward China for solutions and they complied once again with a vengeance. The Chinese started packaging herbal weight loss supplements under similar labeling to their time honored traditional remedies. The problem was that these supplements were only a fast-fuck gimmick and were not prepared with the same care that the centuries old medicines that the people of Japan had come to respect. They also came packaged with a banned ingredient called N-nitroso fenfluramine that created the ultimate weight loss; death. Before the source of the problem could be identified, almost 300 people came down with liver and thyroid ailments along with Hepatitis E, many of them were fatally affected. These products were imported under 17 different labels. The Ministry of Health had a devil of a time determining which of the thousands of labels was causing the problem and it took substantial time to narrow the number of culprits to that eventual number.

The Japanese are particularly sensitive to tainted food because of shortcuts by their own producers. Between a recent outbreak of Mad Cow disease, the mislabeling of imported beef, the regular sale of spoiled milk and the infectious spread of Hepatitis A and B throughout the population, tempers are growing short among consumers.. Moreover, the historically accepted Chinese imported remedies have now become suspect as well and sales have dropped dramatically.

Simultaneously with the occurrence of the diet pill catastrophe, a major Japanese food processing company, Snow Brand Milk Products was accused of repackaging imported beef and disguising it as a domestic product in order to qualify for special government subsidies. On a roll, Snow Brand also made more than 13,000 people ill by selling a substantial quantity of contaminated milk. A criminal investigation was undertaken by the government and a Snow Brand executive has been indicted on fraud charges relative to meat labeling. Snow Brand looks like it may not survive while people around these parts are getting very careful about what they ingest these days.










[1] They have continued dropping and are almost non-existent as of 3/30/99.

[2] November 17, 1997.

[3] In a World Bank Statement on 6/23/98 they stated, “While the bank’s commitment to sound resettlement is evident…problems were found with the appropriateness of the bank’s intervention and with effective follow-through.”

[4] Prices beyond conceivability were paid for paintings by old masters by the Japanese. Many of these works have found their way back into the market after the Japanese purchases went bankrupt or couldn’t pay for what they had bought to begin with.

[5] Japanese Theme Parks Facing Rough Times, Miki Tanikawa, The New York Times, March 2, 2001

[6] The Wall Street Journal, Michael Williams, Phred Dvorak and Gregory Zuckerman, S&P Lowers Japan’s Domestic and Foreign Credit Rating, February 23, 2001.

[7] Ibid

[8] U.S. Taking Lessons From Japan? Economies are often compared, but differences are enormous, Bill Mann, Motley Fool.

[9] Ibid

[10] Other countries that are using this technique are Turkey, Brazil, Argentina Uruguay and such companies as Fiat SpA, IBM. DaimlerChrysler AG

[11] Japanese Economic Woes Benefit Global Investors in Samurai Bonds, Jason Singer, The Wall Street Journal, March 8, 2001

[12] More Sunshine for Japan’s Overworked Students, Howard W. French, The New York Times International, February 25, 2001

[13]  Government officials in Seoul are due to meet today to discuss their response to the decision, warning that “bilateral relations will suffer great damage” if the book ends up being used in schools.” Japan’s history textbook riles South Korea, David Ibison in Tokyo, Financial Times, Wednesday, April 4, 2001.

[14]  Cartoon of Wartime ‘Comfort Women’ Irks Taiwan, Mark Landler, The New York Times, March 2, 2001.


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