[documenting the economics of the Crash is also why we are here. What is happening
Japan is interesting: just as there is no historical precedent (the say) for the
current US boom, so there is no precedent that I know of for the Japanese
delfation, now in its 12th year; the Nikkei is still half what it was at its
height in 1988. Japan-US are dynamically interlinked and if Japan's deflation
turns into outright depression, the effect on the dollar may be spectacular, given
US continuing indebtedness. As an afterthought, appended is what the FT thinks you
should be reading on the beach this summer.Mark ]
By Michiyo Nakamoto in Tokyo
Published: August 4 2000 13:10GMT | Last Updated: August 4 2000 22:31GMT
Japanese real estate prices fell for the eighth year running in the 12 months to
January 2000, highlighting the continuing weakness of demand and triggering
further concerns about the economic outlook.
Land prices in Japan fell 7 per cent last year, almost as much as they did in
1998, reflecting the drawn-out aftermath of the asset inflation in the late 1980s.
According to the National Tax Administration Agency, land prices were down in
almost all 47 prefectures, with the single exception of Shimane where prices
remained flat.
Commercial land prices fell 12 per cent while residential land prices were equally
soft, declining 3.6 per cent. Tokyo land prices declined by 7.2 per cent while
Osaka suffered a 9.6 per cent fall.
The decline in real estate prices has added to growing concerns about the economic
outlook amid falling share prices and weak consumption data.
Household spending, which is crucial to a rebound in Japan's sluggish economy,
fell 1.8 per cent in the year to June, according to government data released
earlier this week. The stock market has also fallen sharply, dogged by concerns
about corporate bankruptcies since the failure of the Sogo retail group. The
benchmark Nikkei 225 average has fallen about 11 per cent in the past month
closing at 15,667.36 on Friday.
The difficult environment has put pressure on the Japanese government to come up
with new ways to stimulate the economy, which has failed to return to
self-sustaining growth in spite of an injection of Y100,000bn worth of public
funds. The latest plan is to extend the use of construction bonds to projects
other than public works.
A committee of the ruling Liberal Democratic Party has been mulling the
possibility of using such bonds, which are strictly restricted to public works
projects, for investment in telecommunications, welfare and the environment.
However, the plan has triggered criticism from government leaders who are
concerned that such a change could lead to even more excessive fiscal spending.
"The issue should be thoroughly and carefully discussed," said Hidenao Nakagawa,
chief cabinet secretary.
The government is under growing pressure to address the grim outlook, since a
slowdown in public works in the autumn, and a likely rise in corporate
bankruptcies, are expected to depress the economy further.
The outlook for the real estate sector also remains grim, according to analysts.
"It will take another one or two years," for prices to change course, says
Toshihiko Okino, industry analyst at UBS Warburg in Tokyo.
The residential sector is expected to see an oversupply of condominiums as early
as the fall, while the commercial sector in Tokyo, for one, will see a surge in
supply as large new developments become available in 2002 and 2003. "Unless there
is very strong demand, there will be an oversupply of commercial property," Mr
Okino warns.
Additional reporting by Bayan Rahman
--------------------------------------------
Books for the bosses on the beach
Martin Dickson suggests some holiday reading to entertain and stimulate the mind
Published: August 4 2000 19:37GMT | Last Updated: August 4 2000 19:46GMT
What books should chief executives be reading as they sit by their villa pools
this summer?
Holiday reading is, of course, a very personal matter. The prime aim of a break is
to refresh body and mind, and some will find that easier staring into the middle
distance or sailing a yacht than poring over yet more print.
But holidays can be a useful time for business people to raise their eyes from the
day-to-day grind and take stock of the wider social and economic context in which
they are operating. For this group, the literary holy grail is that rare book that
entertains, stimulates the intellect, and encourages lateral thinking.
Unfortunately, the biggest business issue of the day - the internet revolution -
has produced remarkably few books which come anywhere near this. Almost all are
breathless, boosterish or adulatory.
Not so The Social Life of Information (Harvard Business School Press), which looks
at the interaction between information technology and human intelligence and
concludes that information is not the same as knowledge; that it takes human flair
and enthusiasm to create wisdom.
A strength of the book is that it is written not by luddites but two men close to
the cutting edge: John Seely Brown is chief scientist at Xerox's Palo Alto
research centre, home of some of computing's biggest breakthroughs, while Paul
Duguid is an academic at the University of California, Berkeley.
Michael Lewis captures some of the flavour of Silicon Valley in The New New Thing
(Hodder & Stoughton), an uneven but entertaining portrait of Jim Clark, the
larger-than-life serial entrepreneur who created the internet browser company
Netscape.
Genome: The Autobiography of a Species in 23 Chapters (Fourth Estate) covers that
other high-technology revolution - genetics. Science writer Matt Ridley gives a
lucid layman's person's guide to the nature of human genes, their function and the
philosophical implications of applied genetics.
Anyone with severe market withdrawal symptoms should read Irrational Exuberance
(Princeton), a critique of the Wall Street bull market by Robert Shiller, Yale
economics professor, who examines the psychological factors (herd behaviour,
sports-like media coverage and new age thinking) behind the rise of the Dow and
reaches some chilling conclusions.
For a historic perspective, The Go-Go Years by John Brooks (Wiley) is a classic
account of 1960s exuberance (with some eerie parallels to now) and its spectacular
demise. For takeover junkies, Taken for a Ride: How Daimler-Benz Drove Off With
Chrysler by Bill Vlasic and Bradley Stertz (Wiley), presents a breathless and
US-centric but entertaining account of Daimler's swallowing of Chrysler.
Globalisation is another big business issue, but books on the subject tend to be
dull or platitudinous - not great beach reading. Better to delve into two works,
published a few years ago, that put in sweeping historical context the factors
that have made some countries rich and others poor.
The Wealth and Poverty of Nations by David Landes (Little, Brown) offers the
analysis of an erudite historian. Guns, Germs and Steel by Jared Diamond (Vintage)
presents an extremely original scientist's-eye perspective. A book to change your
view of the world.
With a US presidential election in the offing, you may want to know the candidates
better. Shrub: the short but happy political life of George W. Bush, by Molly
Ivins and Lou Dubose (Random House), is an irreverent and critical examination of
the Republican nominee's record as governor of Texas. Al Gore gets balanced,
insightful treatment in Inventing Al Gore: A Biography by Bill Turque (Houghton
Mifflin).
Social decay, a topic in this and every other US election, is the subject of a
book that could become a sociological classic. Bowling Alone: The Collapse and
Revival of American Community (Simon and Schuster) by Robert Putnam laments the
decline of informal social institutions, such as bowling leagues, which were once
the glue of many American communities. The result: civic malaise amid economic
prosperity.
Civic collapse amid political chaos is the theme of In The Footsteps of Mr Kurtz
(Fourth Estate), by the FT correspondent Michela Wrong - a grim comedy of the
grotesqueries that accompanied the end of the Congo's Mobutu regime.
For sports fans, Brilliant Orange by David Winner (Bloomsbury) is a highly
original search for the origins of Dutch football culture, while King of the World
(Picador) is the prize-winning story of Muhammad Ali by David Remnick, editor of
the New Yorker.
As for novels, two recent ones from heavyweight authors stand out: The Human Stain
(Cape) by Philip Roth, the final part of his American trilogy, and Booker
prizewinner Disgrace (Vintage), J.M. Coetzee's spare evocation of post-apartheid
South Africa.
Among new writers, White Teeth by Zadie Smith (Hamish Hamilton) is a comic family
epic of multi-cultural north London. A Heartbreaking Work Of Staggering Genius
(Picador), an autobiography/novel by American Dave Eggers, is a huge hit in the US
and is reviewed in today's Weekend section.
For those who prefer their literature classical rather than post-modern, Anthony
Trollope's The Way We Live Now (Oxford) is a tale of a great financier's
fraudulent machinations in the 1870s railway business, and a satire of a society
in the throes of bull market excess. But on second thoughts, perhaps that is a
little close to home.
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