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Japanese editorial excerpts-GOV'T MUST CHANGE ITS REFORM PLAN.

TOKYO, Sept. 13 Kyodo

Selected editorial excerpts from the Japanese press:

GOV'T MUST CHANGE ITS REFORM PLAN (The Daily Yomiuri as translated from the Japanese-language Yomiuri Shimbun)

In which direction is the world's second-largest economy headed? On Wednesday, the Nikkei Stock Average of 225 selected issues closed below 10,000, affected by simultaneous drops in other stock markets around the world that followed the series of terrorist strikes in the United States a day earlier. Wednesday's close at the Tokyo Stock Exchange was comparable to the Nikkei average in August 1984.

The sharp drop below the 10,000 level obviously reflected the crisis facing the nation's economy in recent months. Prices have continued to fall largely because of an enormous supply-demand gap...The nation's gross domestic product in the April-June quarter dropped an annualized 10.3 percent...

The terrorist attacks in the United States have delivered a blow to the Japanese economy. There are growing concerns that this could trigger a global recession. If the sharp drop in Japanese stock prices brought on a financial panic at home, the global economy could reach a critical phase.

Prime Minister Junichiro Koizumi should take the severity of the crisis to heart and take resolute steps to deal with the extraordinary situation.

Undoubtedly, it is necessary for Koizumi to promote structural reforms from a long-range perspective. However, the prime minister should be allowed to change his mind if circumstances so demand...

A crucial task facing the prime minister is to demonstrate a firm determination to end the deflationary crisis facing this country and help stabilize the global economy. He must carry out necessary measures to accomplish that goal.

In December 1989, the Nikkei average rose to an all-time high of 38,915. However, stock prices continued to fall during the 1990s, following the collapse of the bubble economy...

Current stock prices equal one-fourth of the levels in December 1989...

Efforts to shore up stock prices by placating market players' anxiety call for a hefty supplementary budget. The government must put together effective programs aimed at boosting the economy and promoting reforms under the supplementary budget. Programs should include measures to create jobs and renovate urban areas...

Meanwhile, the Bank of Japan should consider further relaxing its monetary policy with the aim of encouraging the mobility of money and ending the current deflationary crisis...In addition, the bank should do all it can to halt the excessive rise in the value of the yen.

The economy of a nation will always change. The question is whether legislators and the Bank of Japan will be able to devise flexible measures to fight the crisis facing their country today.

About 70 years ago, then Prime Minister Osachi Hamaguchi pushed ahead with deflationary policies at a time when his country was in the throes of deflation. He lifted the gold embargo and curtailed the government's budget. The result of his policies was that the economy collapsed under the global financial panic triggered by the Depression in the United States. The same mistake should never be repeated.

(Sept. 13)
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Publication:Japan Policy & Politics
Date:Sep 17, 2001
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