Twiddling Their Thumbs

Since Heizo Takenaka was appointed Japan's Financial Services Minister five weeks ago, he's been remarkably blunt about what was needed to straighten out the country's overextended, reform-proof banks, those black holes that continue to suck the life out of Japan's economy. A hard landing was required, he said. Hopeless loans¡Xthere are at least $420 billion worth of them¡Xhad to be sold off on the cheap or written off once and for all. In addition, the government would have to take over banks that were insolvent by any definition other than that of wishful-thinking Japanese bankers. Last week, however, Takenaka unveiled the details of his plan¡Xand it became clear that Japan's latest attempt at reform would be yet another toothless assortment of half-measures, imprecise benchmarks and overly generous deadlines. In other words, the banks were off the hook. 'This time, I thought they were serious about fixing the banks,' says Richard Jerram, chief economist at ING Barings in Tokyo. 'I guess they were only joking.' Only two weeks ago, Takenaka had convinced the world that it could expect a set of proposals with real heft. But he, like so many before him, got mired in the morass of inertia and self-interest that is Japanese politics. Receiving lukewarm support from his boss Prime Minister Junichiro Koizumi, Takenaka has buckled. At a press briefing last week, Takenaka called his plan 'a good start.' Who says the Japanese have no sense of irony?