IP: the times of London

[Dave Farber <farber () cis upenn edu>]

As sent to the fukuzawa () ucsd edu


April 6 1998     FAR EAST=20


 The changing economic tide is bringing the threat of job losses to a
        populace long used to prosperity, Joanna Pitman writes=20


Japanese batten down hatches as nation drifts into recession=20


  Faces are getting longer in Japan as news trickles through that the
  economy is in a bad way. Debt in the financial sector is spreading=20
through to the rest of the economy and severe recession is on the=20
cards. The hitherto all-powerful Ministry of Finance is in turmoil,=20
reeling from allegations of corruption, and the Bank of Japan, the=20
other stable driving force for the economy, has recently lost its=20
governor, also as a result of corruption charges against his staff.=20


  The Japanese, never ones to put their faith in the political class,=20
have been left wondering who is in charge of the ship of state as it=20
ploughs into ever-stormier seas. But they are resilient in a crisis.=20
Theirs is a society that is always anxious, always prepared for the=20
worst, braced for earthquakes, typhoons and tsunami waves to come=20
crashing into their lives, reducing their belongings to rubble and=20
leaving them to grit their teeth and set about rebuilding their world.=20


  Things have not reached quite such a state yet, but the population is
  preparing for something like it, just in case. Sales of personal=20
safes have soared as depositors have removed their savings from banks=20
to store them  at home under lock and key or stuffed inside their=20
futons. Who is to blame them anyway, with interest rates pegged so low=20
that a one million  yen (=A34,500) deposit in a Japanese bank will yield=20
only 3,000 yen over  the course of a year? But if the Big Bang=20
financial deregulations go according to plan, a much-needed shake-up of=20
the banking sector should occur. According to SBC Warburg Dillon Read,=20
this could leave dozens of failures among banks, securities firms,=20
construction firms and life insurers over the coming year.=20


  One major stockbroking firm, Yamaichi Securities, folded last=20
November under the weight of 2,000 billion yen in off-the-book=20
liabilities. Some 9,300 employees, many of them highly qualified=20
financial technicians, have had to search for new jobs. Less than half=20
have found new work.=20


  Redundancy and long-term unemployment are new and unfamiliar factors
  of the recession only now creeping into the Japanese consciousness. A
  few years ago the word redundancy was barely known, and, at that, was
  always associated with "sick" Western economies such as Britain's.=20
The head of Yamaichi's Tokyo Ginza branch, interviewed on television,
  disclosed that he had been seeking a job without success since the=20
day of the closure announcement.=20


  The typical Tokyo high street is not yet lined with boarded-up shops=20
and  beggars, but late-night bars are closing earlier than they used to=20
and restaurants that once required bookings weeks in advance now have
  empty tables. Cars that would have been abandoned, sold to South-East
  Asian buyers and replaced at the first minor bump, are now seen=20
cruising the streets bruised and patched.=20




  The mood is getting darker and people are keeping their wallets=20
firmly  closed despite new temptations permitted since the deregulation
  programme began. Discount stores have made their appearance on smart
  shopping streets and special sales are on at all times of year. But=20
the  question remains as to whether the public can be tempted into some
  cautious spending to help to rescue their economy.