2010-8-13
Japan is merely serving as a cautionary example to the world.
Before the great financial upheaval, when China had begun its rapid advance, the president of Yale University at the time contributed an article to Newsweek titled “China Will Not Follow in Japan’s Footsteps”… China would navigate the bubble successfully…
The reason the United States is struggling now is that the upheaval left Europe and America with debts so enormous that, if Japan were to become a financial power standing alongside the United States, the early twenty-first century would go down in history as the time when twentieth-century capitalism, with its excessive greed and cunning, came to an end… Its scale was beyond comparison with the real estate bubble, as you called it after looking only at that part of the picture and misunderstanding what had happened.
They acted quickly not only because they were genuine democrats from the outset—each individual is the protagonist and a king, and, unlike in our country, the nation’s most capable people lead its politics as president, treasury secretary, and so on—but also because the world knows all too well the many foolish mistakes Japan made in responding. They therefore did what had to be done with a speed entirely unlike Japan’s.
The debts were so enormous… Their greed had been that great… A certain period of recovery is therefore inevitable, but there is absolutely no chance that it will become a “lost twenty years.”
China knows thoroughly that the rise of the yen was a primary factor in bringing a manufacturing and technological powerhouse of Japan’s stature to this state… Japan was battered by the strong yen… That is why China resists pressure, led by the United States, to raise the value of the yuan as strongly as it can, negotiates down to the wire, and allows the yuan to rise only gradually… China knows that Japan became the world’s second-largest economic superpower…
China also knows thoroughly that one factor in Japan’s great stagnation is that its stock prices have still not returned to their level of twenty-five years ago… The insight of the Yale president who pointed out that “China will not follow in Japan’s footsteps” is being proved correct again today.
China Raises Insurance Companies’ Stock Investment Limit Again … From today’s Nikkei…
By the 12th, the China Insurance Regulatory Commission had announced a measure easing restrictions on how insurance companies manage their assets and raising the limit for stock-related investments to 25 percent. It had only just announced that the limit would be set at 20 percent. The aim is believed to be to support stock prices with the funds available for investment.
China is a communist country, so of course it does not think, as you do, that God runs the market. It knows the truth about markets, and Japan provides it with an ideal cautionary example. Perhaps the people at the center of China’s government are the ones reading my proposals most closely. (Laughs.)
Unlike Japan’s, China’s political leadership consists entirely of the most capable people in the country. Despite the difference in ideology, they run the economy with conviction and prompt action equal to America’s… By now, they must be thinking… As things have turned out, the fact that ours is a communist dictatorship means that we can deal with their capitalism far more skillfully… that we can handle it better than they can.
Mr. Furutachi, and you at the Asahi Shimbun, you in the Japanese media and the various prominent people who gather around it: what will happen if your comfortable way of thinking brings about Japan’s decline?
First, there will be another subject on which you cannot speak freely… You will not be able to criticize China carelessly… An enormous communist country poised to rival the United States will loom over you… Just as Stalin, with an uncompromising attitude, summoned the president of the United States, Roosevelt, to Yalta in his own country, far from America, even though Roosevelt was ill and the United States had already become the world’s greatest superpower and the principal force behind victory.
Your easygoing “everything is fine and dandy” attitude… in truth, the ugliest and most foolish kind of selfishness… China, having become a great power while Japan declines because of that attitude, will never treat you indulgently.
Japan will suffer humiliation in every conceivable setting.
What happens after that is a matter of “history repeating itself.” You will return to the Meiji, Taishō, and Shōwa eras. I want to tell you: if that is what you want, then go ahead.
I want no part of it. That is why I hope my writing will resound throughout Japan as soon as possible.
You think that history cannot repeat itself because yours is a second-rate intellect… You have never reflected on the twenty years during which you committed grave wrongs while living in comfort… because you are always secure in that comfort.
What happens to a country that, far from completing genuine democracy, has created only something peculiar that resembles it? When things are going well, its people think they can carry on as they are. But when their days are filled with humiliation, they turn toward the familiar nationalism. Every country other than the United States, especially those in Asia, does so.
And all the more so when we have yet to correct our fundamental illness.