Magazine article Global Finance

When Will Japan Change?

Magazine article Global Finance

When Will Japan Change?

Article excerpt

Twenty-one years ago a man I knew and respected-Masayoshi Ohira-died while prime minister after losing a no-confidence vote instigated by his own party. Liberal Democratic Party leaders took advantage of the felled leader's demise to capitalize on the sympathy the populace felt for Ohira. Today Keizo Obuchi, perhaps another underrated prime minister, lies in a coma while the leaders of the same party scheme to capture the reins of government in the forthcoming general election. Obuchi's legacy will be the rescue of Japan's financial system, which a few years ago posed a real threat to the stability of the world economy.

Japan has endured a decade of languid economic performance, and future signs are mixed. The Tokyo stock market outperformed all others last year, and it is poised for a repeat performance with a record number of IPOs this year. Japan's manufacturers continue to be among the best in the world, and they hold the greatest number of new patents. And the Internet has captured the imagination of young Netrepreneurs and some of the old boys as well.

Yet unemployment and bankruptcies are at their highest levels of the past fifty years. Real restructuring is happening, but a multitude of major corporations will be forced to acknowledge that they are on the skids with the introduction of new accounting rules. If you're not confused by all of this, you really don't know what's going on.

The cause of Japan's economic problems can be found in its brain-dead political system. …

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