The Weight of the Yen

A provocative financial history of the last fifteen years explains how the U.S. has gone from the world's largest creditor to its largest debtor, examining the terrible costs--both economically and politically--of borrowing money from the Japanese.

An American investment banker who has lived in Japan for the past 15 years, Murphy brings a rare bicultural perspective to his enlightening and disturbing saga of how Japan became the world's largest creditor country while the U.S. became the world's biggest debtor. In his analysis, Ronald Reagan takes the blame for leading the U.S. into an unacknowledged program of borrowing some half a trillion dollars from Japan to finance our federal deficit. Starting in 1981, Japanese investors gobbled up U.S. Treasury securities and propped up American buying power for a decade and a half, allowing successive presidents to avoid the mounting national debt while Americans indulged in an orgy of consumption. Japan found a ready channel for its excess cash, thus helping to perpetuate its ruling hierarchy presiding over a cartelized, government-controlled, mercantilist Japanese economy. Murphy suggests that the mutual dependency harms both countries and observes that our "furtive dependence" on Japan continues through an influx of short-term, unstable Japanese money. He urges U.S. leaders to develop a cohesive, realistic Japan policy in place of hectoring and rhetoric.
Copyright 1996 Reed Business Information, Inc.

An astute analysis of the dangerously self-serving economic games Japan and the US have been playing over the past 15 years, from an expatriate American investment banker. In mercifully jargon-free fashion, Murphy offers a critical interpretation of the events, strategies, miscalculations, and errors that have brought Tokyo as well as Washington ever closer to a day of financial reckoning. First, however, he delivers a clear- eyed overview of how big business works in Japan, where elite finance bureaucrats (who are accountable to neither the electorate nor its representatives) provide administrative guidance that recipients ignore at their peril. The author goes on to review how the credit and industrial policies of these shadowy shoguns made Japan a power in global trade, albeit at no small cost to its populace. He next examines how Japan's ultrainfluential Ministry of Finance allowed indigenous institutions to recycle the vast sums accruing from exports to buy the debt obligations of the US Treasury during the early years of the Reagan administration, when federal budget deficits topped $100 billion. Assessing the consequences of this bailout, Murphy reprises the 1985 Plaza Accord (which laid the value of the dollar far lower than signatories intended) and Wall Street's 1987 crash. Covered as well are the high costs accruing from the collapse of Japan's speculative boom and the unwillingness or inability of American officials to realize that their country's chief lender does not play by the same commercial rules as other nations. By the same token, the author points out, Japan's economic mandarins have yet to appreciate that the Cold War's end has changed a relationship long based on security considerations. Murphy closes with some uncommonly sensible suggestions on how the two superpowers could forsake the ideological denial that threatens their alliance in favor of a realpolitik calculated to inspire cooperation and trust. -- Copyright ©1996, Kirkus Associates, LP. All rights reserved.

Murphy, an investment banker who has lived many years in Japan, enters the long-running battle over the federal deficits by showing how the deficits ballooned over the past quarter-century. While he lays much of the blame on the attempts by Ronald Reagan and George Bush to cut taxes while spending a great deal on defense, he also suggests that our policy toward Japan might be part of the problem. He maintains that by the early 1980s Japan was "becoming the world's largest creditor country [while] the U.S. had [become] the world's largest debtor." The United States desperately needed large amounts of cash, and the Japanese were only too willing to supply it. This made for a volatile relationship between the two countries and fueled our ongoing economic problems. Arguing that Americans largely misunderstand the Japanese, he offers an illuminating discussion of Japanese culture, especially the need for Japanese companies to form keiretsu (business alliances). For public libraries.?Richard S. Drezen, Washington Post News Research Ctr., Washington, D.C.
Copyright 1996 Reed Business Information, Inc.