Director Emeritus, Asia/Pacific Research Center
As everyone knows, since 1991, when a bulging speculative bubble was burst, Japan's economic output has slowed to one percent growth per year. Asset values, such as real estate and the stock market, have plummeted, ushering in a serious and prolonged decade of stagnation. The stability of Japan's banking system is threatened by a huge and ever growing overhang of non-performing loans (NPLs), estimated to range anywhere from $500 billion to $1.5 trillion dollars.
To
American analysts, Japan's economic problem appears to be massive. There
seems to be little hope for full recovery in the foreseeable future. Japan's
once mighty economy is facing the danger of a major financial meltdown, which
might not only send Japan's economy plunging into a severe depression but
which might also trigger
an economic "tsunami" that will wash over the rest of Asia. Given the
magnitude of the problem, Americans have a hard time understanding why Japanese
leaders have taken so long-and have done so little-to restore Japan's economy
to full health.From the perspective of someone living in Japan, however, the economic problems of the past 12 years, though serious, have not reached crisis proportions. Unemployment is less than 6 percent, Japanese corporations have undergone major restructuring, and the government has passed a variety of significant reform measures. The average Japanese citizen does not feel the pinch of a full-blown financial crisis. Over time, many Japanese analysts believe, economic output will pick up, allowing Japanese banks to work their way out from under the crushing weight of the NPLs. In the worst case, the Japanese government will step in to prevent the financial sector from collapsing. Whose views are correct? Americans or Japanese? Only time will tell.
