Over the last decade, Japan has had a trade surplus with the
United States of about $500 billion. In the same period, Japan's
losses on its investments in the US have been approximately the
same - $500 billion.
"Amazing," says economist C. Fred Bergsten, who made the rough
calculation of Japan's losses.
What it means, in a sense, is that Americans as a group got a
free gift of about a half trillion dollars of Toyota Camrys, Sony
TVs, Panasonic VCRs, and lots of other Japanese imports.
This is just one hint of the importance of international finance
and economics to people around the world, though their eyes may
quickly glaze over at talk of special drawing rights, quotas, and
financing gaps. The latter three are in the news as the
International Monetary Fund and the World Bank prepare to start
their joint annual meeting in Washington tomorrow.
Mr. Bergsten, who is director of the Institute for International
Economics, a think tank based here, admits his estimate of Japanese
losses may be off by tens of billions. But, he adds, it does
indicate that those huge annual Japanese trade surpluses -
prompting so many flights of trade negotiators across the Pacific
and so much worry about American competitiveness - "were frittered
away by lousy financial investments."
Of course, there remains the question of distribution of the
gains and losses involved in these Japanese-American transactions.
The American who bought a Honda Accord paid good dollars for it.
The Detroit autoworker who was laid off because of Japanese car
imports may well have suffered loss of pay.
But the owners of Rockefeller Center and various Hawaiian
properties made a killing when they sold to Japanese investors, and
the Japanese investors took severe hits when they sold these assets
years later at a lower price. Many Japanese investors suffered huge
losses in the entertainment industry, California real estate, and
The controversy attracting the most attention at the IMF-World
Bank gathering has been financing of a debt-relief program for the
world's poorest nations. The cost of relief sought for about 20
countries is between $5.6 billion and $7.7 billion, spread over
several years. These countries, including Burundi, Mozambique,
Nicaragua, and Sudan, have per capita incomes of less than $865 a
year. They also have large amounts of "official" debt - that is,
loans from governments of rich nations or from multilateral
institutions like the World Bank and the IMF.
"Small potatoes," says Bergsten of the $6 billion or so in debt