Newspaper article St Louis Post-Dispatch (MO)

Japan Seeks Rx for Ailing Economy

Newspaper article St Louis Post-Dispatch (MO)

Japan Seeks Rx for Ailing Economy

Article excerpt

Japan's political and economic policy leaders stood before Parliament and a national television audience Wednesday to defend their economic policies and assure the nation that they are dedicated to economic recovery.

Financial market participants were impressed. Share prices on the Tokyo Stock Exchange surged for the second consecutive session Wednesday after hitting the year's lowest level earlier this week.

The benchmark Nikkei index of 225 selected issues rose 718.77 points, or 4.38 percent, closing at 17,125.31. It was the largest single-day gain in nearly eight months.

Traders cited hopes that the government is serious about acting to boost the economy, which has been sagging since early 1990.

On Tuesday, the Nikkei average gained 327.83 points, or 2.04 percent, from Monday, when the index plunged to 16,078.71, its lowest close this year.

The Tokyo stock price index of all issues listed on the first section surged 69.81 points, or 5.08 percent Wednesday, to 1,443.87. The index gained 23.58 points, or 1.75 percent, on Tuesday.

Prime Minister Morihiro Hosokawa, Bank of Japan Governor Yasushi Mieno, Finance Minister Hiroshi Fujii and others have begun discussing the possibility of a large-scale cut in income tax and plans to encourage more real estate transactions to help banks write off their huge burden of bad loans.

Those unpaid debts have forced banks to sell stock holdings, driving share prices down in the last few years.

"Optimism among market players that the government is finally going to take action to help revitalize the economy, and financial markets as well, was a big boost today," said Toshiaki Yui, a senior analyst with Nomura Securities.

Gains included banks, steel and iron companies, ship-builders and electronics makers, which have all fallen as the Nikkei average has sunk since peaking at 38,915.87 points in late 1989.

The steady decline in Japanese share prices has accelerated in the past month, with the Nikkei index losing about 3,000 points, or roughly 15 percent, despite the surge Tuesday and Wednesday.

Speaking before the powerful Budget Committee of Japan's lower house, Prime Minister Hosokawa said his administration is preparing to implement tax reforms, industry and financial market deregulation and other measures to spur recovery.

Criticized by members of parliament for a delay in implementing economic support programs, Hosokawa complained that his eight-party coalition has inherited mountains of economic problems, including thorny structural problems, from the former ruling Liberal Democratic Party.

"We are now racking our brains to resolve those problems," Hosokawa said.

In response to the recent plunge in stock prices, Hosokawa said his government is prepared to allow companies to buy back their own shares from the stock market, a measure discussed by previous governments but never implemented. …

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