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No. 4 — January 29, 1999

 

Feature Article

JAPAN VS. THE MILLENIUM BUG: LESS THAN 365 DAYS TO GO by Jon Choy

Summary

Even though computers have come into widespread use in businesses and homes only within the last decade or so, they now play a central, if often hidden, role in everyday life. However, a holdover from the early days of computer programming — saving then-precious memory space by referring to years only by their last two digits — threatens to incapacitate or confuse many computer systems when the year 2000 begins. All around the world, governments, makers of computer hardware, software developers, industry associations and consumer groups have been working feverishly to raise awareness of the so-called Year 2000 or Millennium Bug and to fix the problem before the unyielding deadline arrives.

Japan, like many other Asian countries, has been slow to respond to the potential threat. Only this past September did the government issue an action plan to combat the looming threat. Fortunately, many key players, including the Bank of Japan, began tackling the problem long before Tokyo got around to stating its official policy. Recent surveys show that progress is being made across the board. Nonetheless, it is not clear whether Japan will be prepared when the clock strikes midnight on December 31, 1999.

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Weekly Review

OBUCHI UPBEAT ON ECONOMIC OUTLOOK; URGES ACTION ON DEFENSE BILLS by Barbara Wanner

Apparently buoyed by the formation only days before of a coalition between the ruling Liberal Democratic Party and the Liberal Party, Prime Minister Keizo Obuchi delivered an upbeat policy speech before the Diet's lower house January 19, the opening day of the 1999 regular legislative session. Surprising even some cabinet members, Mr. Obuchi expressed confidence that the recession-stuck economy would grow at an inflation-adjusted rate of 0.5 percent in FY 1999, which begins April 1.

 

PUSH TO RESOLVE BAD LOANS DRIVES BANKING INDUSTRY REALIGNMENT by Jon Choy

Japan's banking industry will shortly undergo a major reorganization, a growing number of experts predict. Regulators have begun to urge banks to get rid of all remaining nonperforming loans by March 31, the final day of FY 1998. These analysts point to the recently announced agreement by Chuo Trust & Banking Co., Ltd. and Mitsui Trust & Banking Co., Ltd. to begin merger talks as presaging an industry consolidation. Such a realignment is considered imperative since, according to data recently released by the Financial Supervisory Agency, banks remain saddled with large sums of bad loans.

 

EURO COMPLICATES YEN STRATEGIES by Douglas Ostrom

At the end of the first month of trading in the euro, the new currency of 11 European nations, Japanese financial authorities find themselves facing additional uncertainties regarding global currency arrangements. Not only is the continued role of the yen as a leading world currency in question, but Tokyo also is threatened with a potential loss of influence to Brussels in the development and the implementation of international economic policy.

 

CLINTON CALLS FOR NEW MTN ROUND; CONGRESSIONAL TRADE AGENDA TAKING SHAPE by Marc Castellano

President Clinton used the high-profile platform of his January 19 State of the Union address to call for a new round of multilateral trade negotiations to boost U.S. exports of farm and manufactured products as well as services. All too aware that world trade-liberalization talks will make little headway unless this country's trading partners have assurances that any agreements reached will clear Capitol Hill, Mr. Clinton prefaced this statement by challenging Congress to set aside partisan differences and reauthorize the White House's lapsed fast-track trade-negotiating authority. He also repeated his administration's long-standing free but fair trade philosophy in an attempt to marshal domestic political support for another MTN round at a time of record-breaking U.S. imports. The United States, Mr. Clinton stated, will enforce the laws on its books against unfairly traded foreign products. To thundering applause, he singled out the 1998 surge in steel shipments from Japan, again threatening action by the government unless imports contract quickly and sharply.

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