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Japan's Prophet

I was delighted to discover this morning that Japanese banker Akio Mikuni has a column in the New York Times. I first met Mr. Mikuni (the Japanese are notoriously formal) about fifteen years when I went to Tokyo. At that time, when few people thought the Japanese economy was in any trouble, he tried to explain to me why Japan’s bubble economy was bursting.

I saw him a few other times when I went to Tokyo and he came to Washington. One of his constant refrains, which he discusses in today’s column, is how Japan’s export-driven economy couldn’t sustain itself. He wanted Japan to stop artificially depressing its currency by recycling dollars and instead to reinvest its trade earnings in spurring domestic consumption. He and his sometime co-author former banker and now economics professor Tag Murphy made that point at length in a in a book they co-wrote seven years ago, Japan’s Policy Trap.

Mr. Mikuni was also the first person I know to warn of the dangers of China’s growing trade surplus with the United States.  But Mikuni always included Japan in that picture--and rightly so because many of the exports from China to the United States are now Japanese company products that are assembled there. It’s a three way relationship--and one that lay at the basis of the current financial crisis (that is, China and Japan provided many of the dollars that led to our own bubble) and continues to trouble the world.

Mikuni is something of a maverick. He owns and runs what has been, and may still be, the only independent bond-rating agency in Japan. That means it depends for its  support on neither the government nor the companies whose bonds it rates. His views of Japan’s and China’s economy, while increasingly accepted here, are still resisted in the higher reaches of Japan’s government.

--John B. Judis