Chapter 443 Pandora's Box
The uncontrolled appreciation of the Japanese yen has brought many impacts to Japan.
The Neon government's purchase of US dollars is one of its self-help measures, while going to the United States is seeking external assistance.
Unfortunately, both measures have little effect, and the latter may even be gloating.
So will the Japanese government just sit there and watch the yen continue to rise and do nothing? Obviously not.
While the Japanese government continued to make small patches to cool down the yen, the Nakasone cabinet was also considering corresponding countermeasures.
In October last year, after the Plaza Accord, Taku Hosomi, president of the Overseas Economic Cooperation Fund of the Ministry of Finance, who was relied upon by Nakasone, was already considering the issue of the appreciation of the yen.
During this period, he created the "Hosomi Notes" on the "procedure for inducing appreciation of the yen", which not only stated "set the appropriate yen-dollar exchange rate at around 170-180 yen per dollar, and gradually induce the yen to stabilize at this level."
It also states that "long-term structural reforms will be carried out in agriculture, distribution, and small and medium-sized enterprises, which are protected by numerous government regulations but have low international competitiveness."
In addition to these, the note also mentioned the relationship between Japan and the United States: "It is natural to ask the United States to make necessary fiscal deficit reduction.
But the feasibility of the policy is also a problem, and we must realize that policy adjustments should be based on Japan’s adaptation.”
It can also be seen from this note that Hosomi's consideration of the appreciation of the yen was quite thoughtful and rational.
Moreover, the appreciation of the Japanese yen cannot simply accommodate the United States. The key is to adjust and adapt itself.
So, at his suggestion, the Nakasone Cabinet gathered people from the financial and academic circles around him.
He established his own private consulting firm, the "Study Institute for Economic Structural Adjustment for International Coordination". Because its chairman was former Bank of Japan President Haruo Maekawa, the institute was commonly known as the Maekawa Institute.
This private consulting agency includes the former Bank of Japan president, the ambassador to the United States, presidents of major banks, and NHK commentators, a total of 18 members.
At the first meeting of the research group, Nakasone began by saying: Observe the recent international situation, especially the economic environment in Japan.
I think this is no longer a time for laughter and talk. If we do not adopt appropriate medium- and long-term policies at this time, Japan's future will easily be shrouded in dark clouds.
It is out of this urgent sense of crisis that I ask you to conduct this research.
Even Nakasone himself, who shouted "A strong Japan needs the support of a strong yen!", realized the danger of the yen getting out of control. This shows how critical Japan's current situation is.
At this time, the Japanese government still insisted on continuing to ensure a certain degree of moderate profit through economic cooperation with developing countries, investment in overseas companies, and guaranteeing the import of raw materials.
The black words on the enterprise mean the enterprise's profit. Japanese enterprises are accustomed to marking the profit part in black words on the account books.
So generally speaking, when “black numbers” are mentioned in Japanese corporate finances, this means profits.
However, doing so will also lead to international condemnation, so Japan needs to make medium- and long-term structural adjustments to its social and economic structure.
Japanese companies have long enjoyed a trade surplus in foreign trade, not only with the United States but also with other countries.
So when everyone sees that Xiaori has been making money, they are of course unhappy, and as a result, Japan has been under pressure from other countries in foreign trade.
Therefore, to the extent possible, Nakasone asked the research group to submit a report within March 1997.
So in the following six months, the research group held 19 sessions and the report drafting committee held 13 meetings .
According to the information that Shirakawa Kaede learned, although this research group was held under the direct leadership of Nakasone, its actual operation was led by President Maekawa.
In April, the report was finally drafted and submitted to Nakasone.
The report points out that Japan's economic development has reached a point where change is necessary, otherwise there will be a risk of crisis if it continues.
The specific goal is to "make the reduction of current account imbalances in an internationally coordinated and reliable manner a medium-term national policy goal."
At the same time, corresponding structural adjustments should be made to address the fiscal deficit.
In response to the above issues and goals, the report recommends that a fundamental transformation of the industrial structure in foreign trade is essential, while efforts should be made to appropriately adjust and stabilize the exchange rate.
We will also further promote the liberalization and internationalization of the financial capital market and strengthen economic cooperation with foreign countries.
The key point is, "further promoting the liberalization and internationalization of the financial capital market" is one of the key measures to follow.
The first part of the report is mostly an analysis of Japan's current economic environment, as well as reform goals and recommendations.
Only at the end does it list the specific measures that Neon will take to deal with the exchange rate.
The first and most important one is to expand domestic demand.
How to do it? First stimulate economic activity by promoting housing measures and urban redevelopment projects.
Pandora's box has been officially opened!
At the same time, measures such as enriching consumer life, shortening working hours, and promoting the preparation of social capital at the local level were also proposed.
A simple and rough translation of these two points is to pay citizens more wages, reduce working hours, and increase consumption.
As for local areas, local capital is allowed to invest overseas!
All the previous restrictions on local financial groups have been removed. Now you can do whatever you want and no one will care.
In addition to expanding domestic demand, the other thing is to adjust Japan's industrial structure, gradually relocate manufacturing, and focus on finance and service industries for future development.
And as mentioned earlier, further promote international financial liberalization.
This means that Japan's stock market will be fully opened to overseas markets and no longer subject to various restrictions.
With real estate as the driving force, the stock market will be completely liberalized. The twin mines of the bubble will be planted today.
Neon! Take off!
This famous Maekawa report caused a huge response in Japan after it was released in April.
There is no doubt that this report is good for the United States, so Xiao Ri Zi has received unanimous praise from all walks of life in the United States.
On the contrary, this report has attracted a lot of criticism in Japan.
The import of overseas products will cause the bankruptcy of small and medium-sized enterprises in Japan, and the presidents of major manufacturing industry associations have protested.
They accused the report of being tailor-made for Japan, saying it would only push Japan into the abyss.
Under pressure, the Neon government agreed to re-discuss the issue, but in reality, all the contents of the Maekawa report were implemented in private.
In order to stimulate domestic demand, the Japanese government, in addition to the contents of the Maekawa report, also lowered interest rates again by the Bank of Japan .
In just half a year, Japan's loan interest rate has dropped to 3.5%, which is the lowest level in Japan since the war.
While the Neon government was busy pushing forward the implementation of the Maekawa Report, the country's export-oriented small and medium-sized enterprises such as the metal food utensils industry and the textile industry were in trouble and the economy was basically stagnant.
As for the life and death of small and medium-sized enterprises, the Japanese government has not taken any action, except to set loan conditions for banks.
However, with the extremely high exchange rate of 1:155, small and medium-sized enterprises cannot continue to make profits from foreign trade no matter how hard they struggle.
They are very clear about their profit margins, and borrowing from banks is just a temporary solution.
At the critical moment of life and death, some small and medium-sized enterprises directly changed their business to stop losses in time, while others simply used the money from bank loans to speculate in stocks.
Don't accuse me of not doing my job properly. Since your government encourages financial investment, you can't just let me wait to die.
Therefore, due to various factors, small and medium-sized physical businesses gradually disappeared, while the stock market gained a new group of active users.
After July, Japan's Finance Minister changed, Noboru Takeshita stepped down and Kiichi Miyazawa took over.
His policies are even more radical than those of Takeshita Noboru. Compared with the Maekawa Report, real estate stimulus remains at the policy level.
Kiichi Miyazawa took real action and the Ministry of Finance approved a budget of 3.636 trillion yen to be invested in public investment and housing construction.
After the Japanese government personally intervened, non-manufacturing industries, mainly residential, began to make great strides forward.
In addition to construction companies buying and hoarding land on a large scale, various construction projects have also been launched.
Individuals also began to borrow large amounts of money from banks to purchase homes and land.
Why? Because under this series of stimulus, Tokyo's land prices have risen by nearly 20% in just half a year compared to last year.
The appreciation of real estate is much more exciting than the stock market.
An investment of 5 million yen can result in a profit of 1 million yen. It is so easy to make money.
And the rise in housing prices has just begun. Everyone knows that under the stimulation of policies, land prices will continue to rise for a long time to come.
So he sold 6 million yuan to buy more land, then used the land to mortgage to the bank, and used the mortgage money to buy more land, and then repeated the process endlessly.
Of course, only a small number of people do this now. Many people’s imaginations are not yet open and their steps are not big enough.
But don't worry, this cool operation will soon become popular on a large scale.
And because of this environment, when Baichuan Feng returned to China, he could clearly feel the changes around him.
People are no longer so cautious when speaking, and their high spirits are all sending a signal.
That is, all Japanese people believe that the era belonging to Japan has truly arrived.
Because of the financial incentive, people's consumption is no longer as conservative as before.
Do you know what Shirakawa Kaede saw on the streets of Tokyo when he came back this time?
Gold-leafed ice cream! Damn! That's real gold, not dyed.
"Xiao Feng, should we buy one and try it?"
Matsuda Seiko, who had just finished her confinement, held onto Shirakawa Kaede's arm and licked her lips with envy.
Bai Chuanfeng glanced at her speechlessly and said, "Don't bother yourself. There are gold nuggets at home. You can go back and chew them as you like."
This is gold! Heavy metal! Are you dissatisfied with your skin being too good and your life being too long?
"Hmph!" She was a little spoiled and snorted in dissatisfaction.
Baichuan Feng knew why she was in a bad mood. It was simply because the twins gave birth to a pair of girls this time .
Without a son by her side, Seiko Matsuda was under a lot of pressure.
As soon as she finished her confinement, she started exercising to restore her figure and prepare for her next pregnancy.
In response to her panic-stricken behavior, Baichuan Feng could only comfort her with kind words.
Don't worry, they will definitely give birth to lots of kids in the future, so having a son won't be a problem.
Then, in order to enlighten her, Baichuan Feng took her out for a walk, and as a result, she saw this scene on the street.
I took a quick look at the price and saw that one piece of gold foil ice cream was about 15,000 yen.
Crazy, really crazy.
Since when did ice cream in Japan start to be priced in units of ten thousand?
Look at the long line in front of the ice cream truck.
Baichuan Feng thought that maybe he was crazy, that was why he was so surprised by so few things.
